Gold cut losses in late European trade on Thursday, but remained vulnerable as the dollar gained against the euro and stocks fell as concern over global credit conditions hurt sentiment again, analysts said.

Spot gold fell as low as $663.10 before rising to $666.50/667.10 an ounce at 10:23 a.m. EDT, against $666.50/667.10 in New York late on Wednesday.

Gold has been hovering in a narrow range below $670 this week as concerns about the health of the global economy prevented players from betting heavily in any one direction.

Most of the clients I speak to at the moment are interested in minimizing positions, minimizing risk and are only trading when they have to, said John Reade, head of metals strategy at UBS Investment Bank.

I think this is a good price to be long gold, but I am not quite sure what's going to make it move up in the short term. We should start to see more demand coming into the market soon on the gold side. If that starts to come through that might encourage people to add to some long positions.

A European precious metals dealer said gold might marginally gain because of window-dressing ahead of the end of the month and a long weekend in the United States, with markets closed on Monday for Labor day, but sentiment remained bearish.

Gold, traditionally seen as a safe haven in times of turmoil, has been tracking the stock market as fears about a global credit squeeze linger.

Investors are still nervous about the fallout of the subprime mortgage crisis and credit crunch and sentiment is bearish. Thus, any negative news could send stock prices lower and this would weigh on gold, Dresdner Kleinwort Investment Bank said in a research note.

European shares fell as U.S. stock futures slipped due to uncertainty about when the Federal Reserve might cut interest rates and on mixed reports on the U.S. economy.

The dollar stayed firmer against the euro and reacted only slightly to a U.S. report showing second quarter GDP revisions were largely on target. A stronger dollar makes gold costlier for other currency holders and often lowers metal demand.

For the moment the dollar seems set to dictate the yellow metals direction, said James Moore, precious metals analyst at

But despite the current volatility across many of the financial markets, gold continues to see steady investment inflows through the various ETF products which again suggest investors are bullish mid to longer-term, he said in a note.

Bullion used to back StreetTRACKS Gold Shares, the world's largest gold exchange-traded fund (ETF), was at a record high of 515.44 tonnes as of Tuesday.

Investors awaited U.S. inflation figures on Friday that could give them a clear picture on how the recent market turbulence in the wake of chaos in the U.S. subprime mortgage sector might have affected the overall economy.

The market is also waiting for Federal Reserve Chairman Ben Bernanke's speech on Friday to hear how he refers to the volatility in financial markets.

In other metals, platinum fell to $1,263.10/1,270.10 an ounce from $1,265.10/1,272.10 in New York, palladium fell $2 to $326/330 and silver was flat at $11.84/11.87.

In industry news, Impala Platinum Holdings Ltd, the world's second biggest platinum producer, said its key mine operation was recovering after recent problems.