Gold rose to a relatively narrower band on Tuesday in thin trading which dealers said contrasted with the volatility of recent weeks. Other precious metals markets were also quiet, except platinum, which rose 1.7 percent from its close in the US market the previous day.
Spot gold was quoted at $557.90/558.80 an ounce by 1532 GMT after hovering in a range of about $6, compared with $554.70/555.50 in New York late on Monday when it fell nearly $4 as investors booked profits from last week's two-week highs.
"It's a consolidation phase after the big moves in the past couple of weeks and months. It seems people are relatively exhausted here and taking a break," Wolfgang Wrzesniok-Rossbach, head of precious metals marketing at Germany's Heraeus, said.
"There are no big issues going on at the moment...I don't think that we will break a range of $548-$560 today."
Gold has fallen more than 3 percent since climbing to a 25-year high around $575 in early February when investors diversified into the metal because of rising oil prices, uncertainty over the dollar's outlook and Middle East tensions.
But the metal has been relatively stable in the past days after volatile trading sessions earlier this month.
"We still believe that gold is in search of a fresh catalyst to return it to recent highs," said John Reade, analyst at UBS Investment Bank.
"For the moment gold seems set for more sideways trade as players monitor the oil and currency markets," James Moore, precious metals analyst at TheBullionDesk.com said in a note.
"Longer-term gold remains bolstered by oil-led inflation concerns, global instabilities and investor diversification."
Oil slid towards $60 a barrel as Algeria renewed its call for Opec to keep the taps open. Prices have fallen about 10 percent in one month.
In the physical market, Japanese investors held off buying of gold bars, while purchases from jewellers also slowed in other parts of Asia.
Commodities consultant CPM Group forecast global fabrication demand for gold would fall 1.6 percent this year to 81.3 million ounces, with jewellery demand falling 2 percent to 71.6 million.
"It is worth noting that prices are getting little support from the physical markets despite relatively steady prices of late, which suggest that threat of further correction remains," Barclays Capital said in a note.
It said a slowdown in inflows into the exchange-traded funds was a worrying signal for the market. Total gold held by the funds rose by just about 16.5 tonnes in February, compared with 87.5 tonnes in January and 43.7 tonnes in December.
Platinum rose to $1,048/1,052 from $1,032/1,036 an ounce, while palladium was at $286/290 an ounce from $279/283.
Silver was quoted at $9.68/9.71 an ounce from $9.64/9.67.
In industry news, state-owned Codelco, the biggest copper miner in the world, on Monday denied a newspaper report that the company was readying a $1 billion spin-off of silver assets into a new company to be listed on the Toronto Stock Exchange.
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