Gold steadied on Thursday, supported by Swiss and Japanese currency intervention, but remained below records hit in the previous session as risk aversion receded and attention turned back to the U.S. economy.
Spot gold was bid at $1,660.20/1,660.95 an ounce, little changed from $1,660.70 an ounce late on Wednesday in New York. It had hit a record high of $1,672.65 earlier on Wednesday, when it also printed records in sterling and euros.
Platinum and palladium extended losses on prospects of a prolonged soft period of global growth and a conciliatory tone to salary negotiations in South Africa.
Yen intervention overnight and the prospect of further Swiss money market measures to stem franc appreciation were positives for gold, said Matthew Turner of Mitsubishi Corp.
As central banks move to weaken the two safe-haven currencies, they boost gold's relative appeal as an asset that retains value in times of monetary depreciation, he said.
Japan sold 1 trillion yen ($12.6 billion) and its central bank eased monetary policy, joining Switzerland in efforts to tame currencies buoyed by safe-haven demand from investors fretting about the health of the global economy.
"The potential for additional safe-haven flows stemming from central bank interventions in FX (foreign exchange) markets adds a significant new dimension to our positive outlook for gold," added UBS in a research note.
"Without doubt, it gives further weight to holding real hard assets over paper assets."
Markets were consolidating ahead of key U.S. jobs data on Friday that could illuminate further its road to recovery, Turner added.
"With the budget deal in the U.S. now done, the focus has shifted to the economy. Last week the economic data were really bad, which has raised expectations of more quantitative easing," Turner said.
"Still, if we have good news, that might trigger profit-taking. In the meantime markets are biding their time."
Elsewhere, markets will be watching the European Central Bank's rate decision at 1145 GMT and following communique at 1230 GMT, analysts said.
"Announcement of a further rate hike is not expected. It will be interesting to see how ECB President Trichet addresses the higher real economic risks and comments on the collateral of Greek bonds," Commerzbank said.
Investors hope the ECB meeting will signal a more aggressive approach to fighting the currency area's debt crisis.
SPDR HOLDINGS UP
In general, investors continue to add to long holdings of gold and silver, given concerns Europe and the United States may tip back into recession.
Holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust and that of the largest silver-backed ETF, New York's iShares Silver Trust rose 0.4 percent on Wednesday from Tuesday.
Platinum has seen steady liquidation following news that Impala Platinum had improved its wage offer to avert a strike, which was speeded by technical selling, analysts said.
"South Africa was probably the trigger, but this clearly shows how the small markets struggle when corrections set in. (The fall) has taken out some technical levels so the sell button has been dusted down," analyst Ole Hansen of Saxo Bank said.
Platinum traded at $1,735.50 an ounce, down 2.3 percent from $1,776.50. Palladium traded at $781.03 from $790.95.
South Africa's National Union of Mineworkers said on Thursday that Impala Platinum had improved its wage offer in a bid to avert a strike that could impact production at the world's second-largest producer of the precious metal.
For a factbox on strikes in South Africa.
Silver at $41.38 an ounce slipped from $41.68 late in New York on Wednesday.