Gold changed course to trade higher on Wednesday, but investors remained cautious because of weaker equities and fears about the global economy.

Gold fell as low as $661.40 in Asia before gaining to $664.40/665.00 an ounce by 5:57 a.m. EDT, against $663.50/664.30 in New York late on Tuesday, when it fell nearly $3.

We still haven't really found a base to build from here. The market is looking for $660 as the first line of support but there is nothing of real substance there, said Tom Kendall, metals strategist at Mitsubishi Corporation.

We have got more U.S. consumer spending data later this week and Bernanke making a speech on Friday, so there are plenty of things out there that could send the market one way or the other, he said, referring to the U.S. Federal Reserve chairman Ben Bernanke.

Gold is traditionally seen as a safe haven in times of trouble but it has behaved much like other assets recently, hitting a seven-week low at $641.10 on August 16, when fears of a global liquidity crisis led to a sell-off in financial markets.

A report showing U.S. consumer sentiment made its steepest fall in nearly two years and Merrill Lynch's (MER.N: Quote, Profile, Research) move to downgrade its ratings on some major U.S. banks due in part to the ailing credit markets scared off investors.

MSCI's measure of Asia Pacific stocks excluding Japan fell more than 2 percent, while Tokyo's Nikkei average also slid more than 1 percent. But European shares bounced, with the FTSEurofirst 300 index of top European shares gaining 0.2 percent after weakening earlier.

It looks like we aren't out of the woods yet despite a lot of people's desire to see things settle down, including the central banks, said Darren Heathcote of Investec Australia.

I suspect gold will remain under pressure for the time being whilst there's a possibility there will be liquidation to cover more margin calls, he said in Sydney.

Gold hovered below its 100-day moving average of around $665 and has lost about nine percent in value since rallying to a 26-year high of $730 an ounce in May 2006.

People are basically frightened and they are still throwing away assets like gold. But looking ahead, I think fundamentals are still intact because of the ETF holdings and a weaker dollar, said a dealer in Singapore.

Despite gold's erratic behavior, long-term investors held onto their positions in bullion exchange-traded funds (ETFs). Bullion used to back StreetTRACKS Gold Shares, the world's largest gold ETF by far, was at a record high of 515.44 tonnes as of Tuesday.

In industry news, Turkey's bullion imports could set a new record this year, as consumer spending was boosted by steadier prices and positive sentiment after the election, a senior industry official said.

In other precious metals, platinum was up $1 at $1,254/1,258 an ounce. Palladium rose to $325/328 an ounce from $323/327 in New York, while silver edged up to $11.74/11.79 an ounce from $11.72/11.77.

(Additional reporting by Lewa Pardomuan in Singapore)