Gold prices drifted down in London on Monday, tracking range-bound currency markets, although analysts said funds had scope to buy more. By 1522 GMT spot gold was at $436.00/436.80 an ounce, off from New York's late quote on Friday at $437.60/438.30.
Prices have gained some 4.5 percent since their low point in mid-July, culminating in a five-week high at $439.10 late last week.
Alan Williamson of HSBC Bank said the move was all the more impressive given relatively light fund buying over the past month.
Data released on Friday showed a small increase in the net long speculative position in New York gold futures in the week to August 2. It rose to 10 million ounces from 8.3 million.
"This was the first increase in the net long position in five weeks and still leaves the fund position below the 12-month average of 11.4 million ounces," Williamson said in a report.
He added this should ensure the recent gains were more sustainable, although gold's performance would remain tightly linked to the euro/dollar.
Traders said business remained very subdued due to thin August trade.
Simon Weeks, director of precious metals at ScotiaMocatta, said he thought the market was overdone by the funds, with little support from elsewhere.
"Generally I think the rally is built on weak foundations again," he said.
Bullion peaked for the year at $446.70 in March and has tried and failed three times this year to climb back to a 16-1/2-year peak scored late in 2004 at $456.75.
The euro hit a two-month high around $1.2400 last week, but was slightly down at $1.2365 on Monday afternoon.
Financial markets were turning their attention to interest rates policy in the United States.
The Federal Reserve is expected to deliver its 10th straight 25 basis point increase in its funds rate at a meeting on Tuesday, taking it to 3.5 percent.
Gold was showing little reaction to a strike by some 100,000 South African gold miners in the country's first industry-wide strike in 18 years to demand higher wages.
Analysts and traders thought the strike was already priced into the market, which was amply stocked in any case.
Weeks said the stoppage might have more impact if it became prolonged.
Platinum lost further ground as a wave of fund buying subsided, dipping as low as $894, some 2.5 percent off last Thursday's 15-month peak. Spot was last at $899.00/902.00 an ounce, down from New York's $908.00/911.00.
Silver slid to $7.06/7.09 from $7.12/7.15, while palladium slipped to $188.00/191.00 from $190.00/195.00.
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