Spot gold was little changed on Tuesday at just above $900 an ounce as traders took a break from a three-day rally to the highest level in more than three months, weighing the fate of the dollar and the risk aversion outlook.
"There is an increasing view that gold's become the best currency play out there and that's supporting the price," said Mark Pervan, chief commodities strategist with Australia & New Zealand Bank.
"Outside of gold there appears to be a general lack of confidence in currencies."
Spot gold stood nearly unchanged at $902.20 an ounce by 0237 GMT (9:37 p.m. EST), compared to Monday's close, after recoiling from a peak at $915.30, its firmest level since October 10.
The world's largest gold-backed ETF, New York's SPDR Gold Trust, which issues securities backed by physical stocks of the precious metal, said its holdings rose 0.37 percent by January 26 to a new all-time high of 832.88 tonnes -- underscoring a growing appetite for pure gold investments, according to Investec Bank Australia.
The trust's bullion holdings have climbed more than 52 tonnes since the beginning of the year.
For details of gold holdings by the ETF listed in New York and also co-listed on other exchanges, click on: here
"Investor demand for gold has been influenced by opposing forces: liquidation of holdings to meet other cash needs on the one hand, and on the other buying as a safe haven against the global economic meltdown and fragile banking system," Citigroup Global Markets said in a client report.
"The worse the financial crisis becomes the greater the safe heaven appeal of gold," it said.
U.S. gold futures for February delivery retreated by 0.66 percent to $902.80 an ounce in after-hours trading on the COMEX division of the New York Mercantile Exchange.
Trading in Asia was subdued as financial markets closed in Singapore, China and South Korea for the Lunar New Year holiday.
On the physical supply side, Australia's Lihir Gold Ltd (LGL.AX) does not see any "material" impact on annual gold yield this year from a landowner dispute that has forced the suspension of operations at its flagship Lihir mine in Papua New Guinea since Friday.
Taking into account other mines it owns in Africa and Australia, analysts expect Lihir to report production of 835,000 ounces of gold in 2008 and forecast output of 1.1 million ounces in 2009 in an announcement on Wednesday.
Oil was little changed at under $46, exerting little if any pressure on bullion, with traders regrouping after the previous day's fall on expectations that OPEC's supply curbs have yet to halt a steady rise in U.S. crude oil stocks.
