Gold ticked up on Wednesday as a pause in gains in equities and the US dollar stemmed selling, with a fresh record in the holdings of the world's largest gold-backed exchange-traded fund confirming healthy demand.
Gold has been weighed down in recent days as the US government's drive to clean up bad loans held by banks fuelled some optimism about the banking system and the economy.
President Barack Obama said on Tuesday he saw signs of progress in his drive to lead the United States out of the economic crisis.
Gold was at $US928.60 per ounce in Asian trade, up 0.3% from New York's notional close of $US925.65 on Tuesday, when it fell nearly 2% on fund selling and a stronger dollar.
"In times of uncertainty, even if equities stage an impressive rally like in the past week, gold continues to be looked at as an asset investors want to hold,'' said a Singapore-based trader.
A recent run-up in equities has led investors to book profits in gold and shift some funds to stocks, leading to a dip in gold ETFs. But traders said a lack of clear evidence of an economic recovery kept support intact for the gold market.
Bullion has recovered about 5% from a six-week low of $US882.90 hit on March 18, but is still more than 7% shy of the 11-month high above $US1000 set in February.
It soared to an all-time peak of $US1030.80 in March 2008.
"With equities, the dollar and euro holding steady, gold is in a narrow $US3 range. A lot will depend on the equities market. If it rallies in New York today, gold could test the support of $US915, and if that is broken, more liquidation could push it towards $US900,'' the trader said.
Holdings of the SPDR Gold Trust rose to a record 1124.99 tonnes on March 24, up 10.7 tonnes from a day before. The previous record was 1,114.60 tonnes marked on March 20.
"ETFs continue to accumulate longs, so any dip in gold prices would be well supported,'' the trader said.
