Gold eased a touch on Thursday, giving up earlier gains to hover slightly below $940 as a halt in the dollar's slide dulled some of bullion's allure as an alternative investment. But the dollar barely moved from late US levels, providing little direction for gold, which moved within a tight band.
Investors were reluctant to trade currencies actively before hearing the Federal Reserve's stance on rate moves and bond buying at its two-day meeting next week after a spike in long-term yields this month. On Wednesday, gold rose as the dollar fell versus most other major currencies after an unexpectedly small rise in US inflation and a debt rating downgrade of US banks by Standard & Poor's.
Gold often trades with an inverse correlation to the dollar as some investors use the metal as a dollar hedge. Spot gold was down 0.1 percent at $937.70 per ounce at 0535 GMT from New York's notional close of $938.40. The low so far is $937.20. It earlier rose as high as $942.70, a level last seen on June 12 and up almost 2 percent from this week's trough of $925.50.
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