Tokyo - Gold prices inched up on Wednesday as the dollar barely moved after slipping the day before, but investors were wary about rising equities drawing money away from bullion, and also before US housing data due later in the day.
Investors kept their focus on the dollar for near-term market direction, as a firmer dollar makes gold priced in dollars more expensive for non-dollar holders and dampens interest in bullion as an alternative asset.
A weaker dollar supports gold if investors are selling the US currency to buy other assets including gold. If the dollar's weakness is due to U.S.-related concerns, it also boosts the appeal of gold as a hedge against risks.
"Gold is still in ranges, but it may come off a bit as equities are climbing and drawing investors' money," said a trader based in Singapore.
"Data is showing the US economy may be picking up, making investors cautious," the trader said, adding that gold will still likely see disinvestments at prices near $960-$970 while finding support near $930 when buying interest resumes.
Spot gold was up 0.4 percent at $947.40 an ounce as of 02:35 GMT, compared with New York's notional close of $943.55.
US gold futures for December delivery were up 0.3% at $948.90 per ounce, compared with $946 an ounce on the Comex division of the New York Mercantile Exchange. Gold futures surged to a session high of $954 on Tuesday.
Japanese stocks rose 0.6% on Wednesday, buoyed by US data that strengthened hopes for an economic recovery.
US stocks rose on Tuesday when a US consumer confidence index topped economists' forecasts and a home price index rose for a second straight month in June, suggesting a recovery in two sectors crucial to a rebound in the US economy.
Asian equities outside Japan eased 0.2%.
The dollar was steady against the euro on Wednesday. The US currency had slipped against the euro and yen the day before as upbeat US data and the nomination of Ben Bernanke for a second term as head of the Federal Reserve bolstered optimism, encouraging some investors to buy higher-yielding currencies and assets.
Amid a lack of clear direction and the market failing to break above the recent range of $930-$970, holdings at the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, fell to 1 061.83 tonnes as of August 25, down 4.58 tonnes or 0.4% from the previous business day.
On Friday, its holdings rose for the first time since July 16 for the biggest one-day gain since June 1, and held at that level for two business days.
Among other precious metals, spot palladium eased 0.5% to $284.50 per ounce.
On Tuesday, palladium prices touched $287.50, the highest since early September last year, as hopes for an improvement in the balance of supply and demand and gains in gold boosted interest in the material used in auto catalysts.
