Gold edged down on Thursday, taking a breather after hitting a new record above $1,150 per ounce the previous day as inflation fears fuelled by stronger-than-expected U.S. consumer prices added to the already bullish mood.
By Risa Maeda
But the dollar gained some ground against a basket of currencies on Thursday, slightly sapping gold's momentum. The metal is often bought as an alternative to the U.S. currency.
Investors were largely seen pausing before checking new economic data to see if U.S. interest rate hikes are still a long way off.
"The structural strength in gold remains in tact," said Kaname Gokon, deputy general manager at Japanese commodity brokerage Okato Shoji Co's research section.
"Any further dips would be supported as buying is expected to emerge at around $1,120. Nothing will change unless strong U.S. data dashes a consensus that U.S. interest rates will stay low," he said.
Spot gold was at $1,142.25 per ounce at 3.15 a.m. British time, down 0.2 percent from New York's notional close of $1,144.70.
U.S. gold futures for December delivery were steady at $1,143.00 an ounce after closing on Wednesday at $1,141.20, up $1.80. The contract hit a record of $1,153.40 on Wednesday.
Bullion reached an all-time high of $1,152.75 on Wednesday. It had pierced record highs on eight of the 12 sessions until Wednesday, during which time it rose more than 8 percent.
Doubts about a nascent economic recovery and jitters among central banks, some of which have diversified away from the U.S. dollar, have raised gold's allure as a safe haven asset.
Nigel Phelan, Australian and New Zealand director of ETF Securities, said the most recent move in the price of gold built on the sharp rise earlier this month that was stimulated by the announcement that India will buy 200 tons of IMF gold.
"Many market participants view this purchase as just the tip of the iceberg, with China, Russia and other central banks also indicating their intention to build up gold holdings as part of their strategy to diversify away from the U.S. dollar."
"Gold is being viewed as one of the primary alternatives to holding paper currency and the gold price has become a key barometer of investor confidence in government policies," Phelan said in comments emailed to Reuters.
Underlining the metal's strength, holdings by the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose on Wednesday for the first time since November 9.
SPDR Gold said its holdings rose by 3.66 tons or 0.3 percent from the previous business day to 1,117.493 tons on Wednesday.
The world's largest silver-backed exchange-traded fund, the iShares Silver Trust, said its bullion holdings rose to a record 9,021.31 tons on Wednesday, up 67.23 tons or 0.75 percent from the previous business day.
Among other precious metals, spot silver was at $18.49 per ounce, off a 16-month high of $18.83 hit the previous day.
Platinum was at $1,441 after reaching the previous day $1,463.50, its highest since September 2008.
Palladium was $369.25, off a 15-month high of $376 hit on Wednesday.
