Gold prices steadied to hover slightly above $880 an ounce on Wednesday, supported by physical demand that helped offset waning investor interest in gold as a safe-haven asset.
The market continued to closely track news for an insight into the health of the financial industry, which could once again enhance gold's allure.
Prices fell on Tuesday, relinquishing early gains as global share prices arrested their decline and helped ease credit jitters that had previously heightened bullion's appeal.
Bullion has been trading below $900 since April 6, after falling about 12 percent since late February when it topped $1,000, which was the highest level since March 2008.
Gold was trading at $883.50 an ounce at 11:09 p.m. EDT, up 0.1 percent compared with New York's notional close of $882.25 on Tuesday.
"Yes, I think physical demand has picked up a bit, perhaps from the Indian side," said Adrian Koh, an analyst at Phillip Futures.
"That's probably why we saw a bit of a run up on gold prices over the past couple of days," he said.
The dollar weakened against the yen, shedding 0.3 percent to 98.40 yen after gaining 0.8 percent on Tuesday. It hit a six-month high of 101.45 on April 6 but has gradually fallen since then.
Gold imports by India, the world's largest consumer of the precious metal, are set to grow by a quarter in April from a year ago, the first rise since August, the head of metals trading firm MMTC Ltd (MMTC.BO) said on Tuesday.
He added that demand should strengthen ahead of festivals later in the year.
Jewelry sales, which accounts for the bulk of India's gold consumption, rise significantly during the festival season from mid-August to October.
Demand for gold as an investment was taking a break, however.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings remained unchanged at 1,105.98 metric tons as of April 21 after investor outflows early this week reached their biggest since early September.
It still remains in sight of a record 1,127.68 metric tons, marked on April 9.
