Spot gold was on the backfoot in Asia Tuesday, slipping on profit taking after breaching $1,000 a troy ounce on Friday.
Most traders expected a period of consolidation after passing the $1,000 mark, but there is a risk that gold could slip further if the rally loses momentum.
However, a drop in the Dow Jones Industrial Index overnight to its lowest level since 1997 boosted safe-haven buying of gold, lifting prices off lows and highlighting again gold's unique status at a time when so many assets are performing so poorly.
Potentially worse-than-expected results from Royal Bank of Scotland and Lloyds in the U.K. could provide the catalyst for further buying, said ANZ commodity strategist Mark Pervan.
'Encouragingly, divergence from tracking a lower euro and oil prices should create greater upside price appeal. The performance of equity markets will be the best guide, with further falls prompting safe-haven buying,' said Pervan.
Gold holdings in the New York-listed Gold SPDR Gold Trust fund were steady at 1,028.98 metric tons as of Feb. 23, unchanged on the day in a pause from an astonishing series of increases in its gold holdings.
At 0721 GMT, spot gold traded at $988.40/oz, down $3.30 from the New York close. Silver was up 8 cents at $14.49/oz. Platinum traded at $1,080.50/oz, up $5.50, while palladium was up $5 at $201.00/oz.
On Tocom, gold futures rose Y74 to Y3,039 a gram, and platinum futures were up Y91 at Y3,315/gram. -By Elisabeth Behrmann, Dow Jones Newswires;
61-2-8272-4689 elisabeth.behrmann@dowjones.com
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