LONDON—Spot gold edged higher on a slightly stronger euro.
Lower-than-expected demand at the European Central Bank's three-month refinancing tender boosted the euro, helping gold in dollar terms but also easing demand for safe-haven assets.
Spot gold recently was up 0.2% at $1,243.10 a troy ounce.
Gold's failure to hold above $1,250 an ounce after nearly reaching a record Monday has several analysts looking for a near-term correction.
Commerzbank analyst Eugen Weinberg said the gold market has become predominantly long and is therefore vulnerable to bouts of profit-taking.
Still, he predicted gold would rebound through the second half of the year as the metal continues to benefit from the weaker global growth outlook and uncertainty on whether the euro zone's austerity measures will succeed in bringing down high government-debt levels.
"Gold might prove to be the safe haven many people are looking for," he said. "I wouldn't be surprised to see us at $1,300 by year's end."
Analysts noted holdings in gold exchange-traded funds continue to rise. Holdings in the SPDR Gold ETF increased by 4.25 tons Tuesday to a record 1,320.4 tons. That steady demand should provide a floor to prices if prices ease, said James Moore at TheBullionDesk.com.
"The increase in SPDR holdings [Tuesday] again reflects investor confidence in gold as a safe haven, and given the scale of concerns towards the economic recovery and European debt situation, gold could be brewing for another challenge of its all-time high," he said in a report.
In other metals, spot silver gained 1.1% to $18.72 an ounce. Spot platinum was 0.2% lower at $1,538 an ounce, and spot palladium was 1.1% higher at $455 an ounce.
