Gold fell briefly on Monday to touch a one-week low under $US1150 an ounce as investors grew cautious about the outlook for the precious metal after last week's dollar rally.
Prices tumbled over 4 per cent on Friday in gold's biggest one-day percentage loss in a year, after the US dollar rallied on better US jobs data than expected.
Kazuhiko Saito, chief analyst at Tokyo's Fujitomi Co Ltd, said some investors were beginning to wonder if central banks might begin to tighten up measures they have taken to boost liquidity, leaving less money flowing to gold.
European Central Bank President Jean-Claude Trichet last Thursday laid out a package of decisions on ending and tightening up the measures the ECB has taken to boost liquidity to the banking sector.
"A day earlier, the ECB said it would (unwind its crisis support) ... I think that made global investors wonder if the US might be next," said Saito.
"I don't think gold would have fallen quite this much (on Friday's dollar rally) alone if that statement hadn't been made," he said.
The US dollar jumped against other major currencies on Friday after data showed the United States lost far fewer jobs than expected last month, bolstering hopes the economy is on a stable path to recovery.
Saito said, however, that the tide against gold was unlikely to totally turn on just last week's dollar rally and jobs data, as countries such as Japan and the United States are expected to keep interest rates low.
Spot gold was at $US1153.30 per ounce in Asian trade this afternoon, down 0.5 per cent from New York's notional close of $US1159.55 but up from the day's low of $US1146.60.
Bullion rose to an all-time high at $US1226.10 an ounce last Thursday amid expectations for persistent weakness in the US currency.
US gold futures for February delivery fell 1.3 per cent to $US1154.70 per ounce. The US dollar slipped against the yen on Monday as traders pocketed profits, slipping from a one-month peak hit late last week when a surprisingly low number of US job losses boosted hopes for an economic recovery.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1129.966 tonnes as of December 4, down 1.524 tonnes or 0.1 per cent from the previous business day.
Noncommercial net long US gold futures positions fell 1.2 per cent to 259,064 lots in the week to December 1, down from a record 262,331 lots, a weekly report by the US Commodity Futures Trading Commission showed.
China will overtake India as the world's largest gold consumer in 2009, with total demand forecast at 432 tonnes as wealthy investors defy record bullion prices, metals consultancy GFMS said on Friday.
