Gold eased in Europe on Wednesday, pressured by a drop in oil prices and worries that funds could liquidate, but the long-term outlook remained bullish, dealers said.
Gold was expected to trade in a range, with worries about inflation and good consumer demand providing support for the metal which has risen more than four percent in a month.
By 1445 GMT, spot gold was quoted at $463.10/463.80 a troy ounce, down from $466.10/466.80 when last traded in New York on Tuesday. It climbed to a near-18-year high of $475 on September 22.
"It's really sort of lacking any direction and needing a lead. It's capped on the upside but supported at $457 level," said analyst Alan Williamson of HSBC Bank.
He said gold prices continued to consolidate as the market awaited the next significant move.
"Many people in the market are waiting for a correction to take place. It is very likely that gold could correct to $460 in the near term," said Yingxi Yu, analyst at Barclays Capital.
"(But) when you see prices falling to $465, funds are very willing to come in and support the price because they still believe in inflationary pressure that is going to last at least in the near term."
Oil steadied near $64 on Wednesday after losing more than $2 a barrel this week as investors grew more convinced high energy bills were crimping consumption and Washington offered to tap emergency reserves.
Market players were cautious and waiting for clearer trends as worries about inflation continued. Gold is often seen as a hedge against inflation.
Physical demand in India, the world's largest consumer and importer of gold, was expected to pick up in the coming days. Consumer buying in other regions, such as the Middle East, was also good, dealers said.
"Gold has dipped back towards $464 overnight and remains vulnerable short-term to a correction lower due to the scale of speculative longs and the recent gains in the dollar and profit taking in oil," TheBulliondesk.com said in a report.
"Any dips, however, will remain well supported by physical sources as the metal enters its peak demand period while the prospect of further gains in mid to longer-term remain strong."
The investment fund long position in COMEX gold futures hit a record high last week, according to Commitments of Traders data from the Commodity Futures Trading Commission on Friday.
The non-commercial net long position rose to 166,100 contracts as of September 27, from 158,126 lots a week earlier. Gold buying, especially jewellery, surges in India during the festival season that peaks in November with Diwali, the festival of lights. Indians like to buy gold or present jewellery as gifts during religious ceremonies.
Christian Baha, founder and chief executive of Monaco-based fund Superfund, said that commodities remain undervalued despite spectacular price rallies over the past three years or so.
"I think gold is really undervalued," he told Reuters in an interview. "Looking at the longer term, there is quite a huge potential for gold." He expected gold to double in the next few years from where it was now. Silvereased to $7.31/7.34 from $7.37/7.40 last quoted in New York, while platinum was almost flat at $913/916. Palladium edged up to $191/194 from $190/194.