Reflecting the anxiety in financial markets, safe haven currency the Swiss franc rose versus the euro and may test a record high in the days ahead after the Swiss National Bank's latest steps to curb its strength were seen as too timid.
The dollar index rose 0.3 percent, after dropping to a three-week low in the previous session.
Spot gold gained 0.2 percent to $1,791.50 an ounce by 0325 GMT, after three days of rises. It was only 1.2 percent below its all-time high of $1,813.79 struck last week.
US gold was flat at $1,794.70 an ounce.
"Gold is stabilising in the near term," said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong.
"But low interest rates in the United States and the messy situation in Europe will push gold higher."
Leung said physical buying was muted as prices advanced towards the record high, with investors waiting for a price dip.
Gold-backed exchange-traded funds continued to draw interest. Holdings in the SPDR Gold Trust, the world's largest gold ETF, rose by 0.72 percent on the day to 1,271.985 tonnes by Aug. 17.
The Relative Strength Index on spot gold remained above 70, which suggests the underlying asset has been overbought, although it has been in this territory for nearly two weeks.
Technical analysis suggested that gold faces resistance at $1,793 an ounce, said Reuters market analyst Wang Tao.
But gold's bull run still has momentum.
"Although profit-taking, margin requirement hikes and seasonally soft physical demand could temper the rally intermittently, the external environment has turned increasingly fertile for gold," said Barclays Capital in a research note.
Gold's fortunes could be altered in the case of rising real interest rates, controlled inflation and a stable macro-environment, it added.
Spot silver gained 0.1 percent to $40.23 an ounce, after closing above $40 for the first time in two weeks in the previous session.
Holdings in the iShares Silver Trust, the world's largest silver ETF, edged higher to 9,727.10 tonnes by Aug. 17, the trust said.
"The sentiment in silver is still weak even though prices are climbing slowly," said a Tokyo-based trader.
He added that although a gold rally traditionally encourages silver prices to rise, the poor economic outlook has weighed on demand prospects of the metal, which has wide industrial applications.
"The 20-day moving average has been a decent support and the rising channel seems in place, but it will be difficult for silver to breach $42 unless gold advances towards $1,850."
Spot platinum held steady at $1,834.25, after rising for seven sessions straight.
Copyright Reuters, 2011