Singapore: Gold steadied above $1,250 an ounce on Wednesday as Asian equities failed to hold on to a modest rally amid global economic growth concerns.Bullion was trading in a narrow $3.52 range, the smallest since late December, as the closure of Chinese markets for the Lunar New Year holiday weighed on volumes. Caution ahead of a key US jobs report on Friday also hurt buying interest.
Asian shares struggled to sustain the slimmest of rallies as a hesitant performance by the Japanese market fuelled fresh demand for safety in the yen and top-rated bonds.
Spot gold was trading flat at $1,254.70 an ounce by 0723 GMT, after dropping as much as 0.2 per cent earlier in the session.
Analysts, however, expect gold to gain in the near term as worries persist over global economic growth and capital flight from emerging markets following the Federal Reserve's move to taper its stimulus.
"The risk-aversion attitude in the market is quite significant and gold should benefit from that in the short term," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
To also said he does not expect US data and earnings to be strong enough to ease concerns about economic growth.
Gold has gained 4 per cent so far this year after a 28 per cent drop in 2013. Bullion is often considered an alternative investment option to risky assets such as stocks.
Investor sentiment as measured by inflows into gold-backed funds seemed to be optimistic.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 3.89 tonnes to 797.05 tonnes on Tuesday.
The fund, which saw over 17 million ounces of gold leave its vaults last year, has not seen any outflows in more than a week.
ETF Securities said on Tuesday its gold exchange-traded products saw inflows of $44 million last week - the biggest since August.
Physical demand, however, has been weak as top buyer China is closed for the Lunar New Year holiday.
Other parts of Asia were also subdued due to the recent gain in prices and weakness in regional currencies. Spot gold prices have risen in five out of the past six weeks.
A survey by online precious metals market BullionVault showed physical buying among private investors fell for a third consecutive month in January.
The release of US non-farm payrolls data on Friday could provide a strong cue for price direction.
Spot platinum was holding steady after a sharp slide in the previous session as wage talks between South Africa's AMCU union and the world's top three platinum producers resumed to try to end a nearly two-week long strike.
The strike has halted production on about 40 per cent of global platinum supply.
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