Gold dropped more than 1% as the US dollar gained against the euro and as investors booked profits after pushing bullion to its highest in almost six weeks on turmoil in financial markets.
Gold, which posted its biggest two-day rally since January 2000 this week, has rebounded more than 18% since tumbling to a 13-month low of $US680.80 an ounce in late October, when a sharp sell-off in equities forced investors sell gold to cover losses.
Gold was $US5.95 an ounce lower at $US813.60 an ounce from New York's notional close on Monday, when it a high of $US829.20 after the US government's rescue of Citigroup reinforced financial uncertainty.
"There's some selling, most probably from the physical side because gold has gone up so much, but I guess the trend is still pretty good. Physical buyers such as jewellers would like to wait for a while,'' said a dealer in Hong Kong.
"I would think gold will try to break yesterday's high around $US929 again.''
Safe-haven gold has gained as much as 11% in the last two trading sessions. It struck a two-month high of $US931 in early October but has since traded in a wide range as it struggled to revisit March's record of $US1,030.80.
The euro eased to $US1.2903 after hitting a two-week high in New York as risk aversion eased after the US government agreed to inject $US20 billion of new capital to Citigroup.
Oil fell below $US54 a barrel on Tuesday. It rose nearly 10% in the previous session after a rebound in equity markets and expectations of another OPEC cut helped the market score its biggest two-day gain in two months.
A firmer dollar reduces gold's appeal as an alternative investment, while weaker oil prices rob gold of some of its appeal as a hedge against inflation.
Gold was likely to trade in a narrow range before an OPEC informal meeting in Cairo later this month, said Kazuhito Saito of Interes Capital Management in Tokyo.
"There will be position squaring in all commodities. New York crude oil will trade between $US50 and $US55. Gold's range will be narrow this week,'' said Saito.
Jewellery makers were on the sidelines but there was some buying of platinum by Japanese investors, he added.
Platinum traded at $US860.00 an ounce, up $US4.00 from New York's notional close. It hit a two-week high of $US868 an ounce, driven by recent gains in gold and buying by the Japanese.
Japan's Nikkei average jumped more than 4% on Tuesday after Wall Street soared the previous day.
New York gold futures fell $US5.0 an ounce to $US814.5.
