Gold edged down on Wednesday, approaching a three-week low near $US900 per ounce, as some investors cashed out to seek bargains in recently battered assets, including stocks.
But doubts over the outlook for the global economy were providing support to the yellow metal. Investors are waiting for US economic data, including a monthly jobs report later this week, to gauge the health of the world's biggest economy.
Spot gold was at $US913.80 an ounce in Asian trade, down 0.2% from its notional close in New York. It earlier touched a low of $US909.75.
On Tuesday, gold fell as low as $US904.30, the lowest since February 10, dragged down by forced liquidation related to a volatile equities market and technical weakness. It hit an 11-month high of $US1005.40 on February 20.
"There are signs that some investors are unwinding some gold longs to shift away from safety,'' said Tatsufumi Okoshi, senior economist at Nomura Securities Co's financial and economic research centre.
US shares fell again on Tuesday, but their losses were narrower than before. Also, non-gold commodities markets were showing resilience after a sell-off recently, he said.
"But that does not mean the allure of gold is fading. There is persistent fear that stock markets could be hit again,'' Okoshi said.
Some will also be watching the monthly private US payroll survey from ADP Employer Services later in the day, which serves as a forerunner to Friday's US non-farm payrolls report.
A Reuters poll estimated the ADP national employment index of would point to a loss of 610,000 jobs in February.
Japan's Nikkei stock average fell 0.8% on Wednesday, with other exporters slipping despite a weaker yen on growing worry about demand as the global recession bites.
Oil prices dipped on Wednesday after rising nearly 4% on Tuesday on expectations that producer group OPEC will cut output again.
Demand for gold-backed exchange-traded funds has stalled in the past week, curbing aggressive buying in the physical market. The steady flow of money into ETFs has been key in pushing gold prices higher since the beginning of the year.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings have held at a record 1029.29 tonnes since February 26.
