Gold slipped more than one percent in European trade on Wednesday with a stronger dollar and easing crude oil prices dampening sentiment, dealers said. Spot gold was quoted at $465.60/466.30 a troy ounce by 1502 GMT, down from $471.10/471.90 last traded in New York on Tuesday.
"A lot of selling today has been currency-related, this is making some people nervous," said a metals trader in London. "Fundamentally nothing much has changed and I still think the momentum is going to be higher."
The current price could attract investors and physical buyers who had postponed purchases in anticipation of a drop in prices, but gold was expected to climb eventually due to continued inflation worries and choppy currencies, dealers said.
"It is consolidating in this range for a period of time until something happens," said Paul Merrick, analyst with RBC Capital Markets.
"That something could be another tropical storm in America or a surprising economic number or a decision by the Chinese or a central bank to buy gold, or whatever."
Some analysts said a drop in prices could trigger fund liquidation, but consumer demand at lower price levels could provide some support.
Gold's traditional inverse relationship with the US currency was seen being re-established again, with gold showing weakness recently as the dollar rose, dealers said.
A strong US currency makes dollar-priced gold costlier for holders of other currencies and lowers demand. But the relationship had weakened in the past weeks.
The dollar was off a two-year high against the yen and a three-month peak versus the euro reached earlier on Wednesday, but still was mostly higher on the day as investors continued to focus on yield.
Crude oil dropped on Wednesday after US inventory data showed that high oil prices were continuing to prompt consumers to cut back on fuel use.
Platinum marginally rose to $930/934 an ounce from $927/933 in New York.
Dealers in Asia said platinum's fall from a 25-year high of $443 last week had done little to stir interest in China, the world's largest platinum consumer, where jewellery makers were relying on old stocks to meet demand.
Poor margins had hit jewellers, forcing them to turn to cheaper white gold - an alloy of gold and other light-coloured metals such as silver and palladium, they said.
In a related news, South African gold miner Gold Fields Ltd said on Wednesday it had formed a joint venture with Canadian North American Palladium to develop a platinum mine in Finland.
Gold Fields, the world's fourth-biggest gold producer, also said it had agreed to grant an option to North American Palladium to take up to a 60 percent stake in the Arctic Platinum Project (APP), including other mining assets based on a series of conditions.
Spot silver fell to $7.66/7.69 from $7.76/7.79 last quoted in New York.
Palladium fetched $205/208, versus $209/213.