Gold firmed on Wednesday, holding near its highest in more than three months hit this week, as troubles in the financial sector spurred investors to look for havens from market turmoil.
Gold was 13 percent above a 1-month low around $801 hit two weeks ago and around 12 percent below a lifetime high of $1,030.80 struck last March, with investment demand also pushing exchange traded fund holdings to a record above 800 tonnes.
Gold was trading at $898.60 an ounce, up $1.25 from New York's notional close on Tuesday, when it slipped nearly 1 percent on profit taking after prices rallied to $915.30 on Monday, its strongest since early October.
"The gold-dollar relationship has weakened recently. That pretty much brings the 'safe-haven' factor into play again," said Adrian Koh, analyst at Phillip Futures in Singapore.
"Investors are probably more concerned about what's happening in the markets now and feel that gold will probably be the standout winner against the other currencies."
Record high holdings in the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, was also seen as a bullish sign as it indicates longer-term investors are entering the market, dealers said.
The SPDR Gold Trust said it held 832.88 tonnes of gold as of January 27, unchanged from record levelson the previous day but up 0.31 tonnes from January 23. Holdings have gone up more than 7 percent in the past month.
"For the near-term, I am looking at the $920-$930 regions for resistance, and if we do move above those regions, it could get a little more positive for gold," said Koh of Phillip Futures, referring to highs seen in July last year.
A Reuters survey of 52 analysts published on Monday showed most expect gold to hold its ground in 2009 despite expected falls in other asset prices, on worries over the global economic outlook and turmoil in the financial markets.
In other markets, the dollar slipped against the euro as investors awaited the outcome of a Federal Reserve meeting that could unveil new steps to ease the credit crunch.
Japan's Nikkei average eased 0.37 percent as worries about earnings weighed.
Crude oil regained some of its losses from the previous day, when prices dived 9 percent as economic jitters in the United States stirred energy demand concerns.
In the physical sector, high gold prices spurred selling from jewellers and speculators in Indonesia and Thailand.
"I am not sure if the investment is actually coming from Asia. I think it's the Europeans who have been buying," said a dealer in Singapore.
"We've seen physical selling in Asia because the price has gone up. Thailand has been selling quite a lot lately," he said.
Premiums for gold bars were unchanged at 50 U.S. cents an ounce to the spot London prices in Singapore.
Platinum was trading at $947.00 an ounce, up $2 from New York's notional close.
New York gold futures eased $1.0 an ounce to $898.5 in electronic trade.
