Gold was mostly steady in Asia on Tuesday, taking a breather before another expected attempt at a 16-year high above $430, helped by the weak US dollar and high oil prices, traders said.
Gold hit a six-month peak at $430.20 an ounce on Monday after the US dollar sank to near record lows against the euro, making dollar-priced gold a bargain for holders of other currencies.
Profit taking erased some of the gains but analysts said the rally was not over. Rising crude oil prices supported gold, which is traditionally seen as a hedge against inflation. Spot gold was at $428.25/429.00 an ounce, unchanged from New York's last levels on Monday, when the metal rose around $4 an ounce.
Some analysts said gold would have to move beyond $430 to levels last seen in 1988 if it were to avoid heavy speculative selling, given a large net long position among funds in New York.
"In the next few days, gold will probably test $432 and $435. There's no firm sign that the rally is over," said an analyst in Sydney. The dollar hit a fresh eight-month low against the euro on Tuesday because of worries about the strength of the US economy and a widening US trade deficit.
The dollar was under pressure from a series of factors, including uncertainty about the result of November's US presidential election and comments from European officials that suggested they are comfortable with a higher euro, said analysts.
The euro, which has gained close to 5 percent in the past three weeks, rose as high as $1.2839. It was trading at $1.2826, compared with $1.2805 in late US trade. "It seems that everybody is quite bullish on gold," said Ronald Lunge, director of Lee Cheong Gold Dealers in Hong Kong, a key bullion-trading city in East Asia.
"I think everybody wants to buy gold in the physical market but the price is too high. I think they (will) wait for the lower end," he said. In other precious metals, silver was at $7.31/7.34 an ounce, compared with $7.33/7.36 last quoted in New York.
Spot platinum was at $850/855 an ounce, compared with $846.50/851.50 last quoted in New York. Sister metal palladium was at $214/219 an ounce, versus $214/220 in the US market.
In Tokyo gold futures, the benchmark August gold contract lost four yen per gram to 1,470 yen.
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