Gold returned to higher levels in late Tuesday trade as worries over further downgrades of some European countries' debt gave the metal a safety bid, though holiday-thinned conditions left prices in a slim range.
Analysts say they expect prices to hold within the $1,360 to $1,400 an ounce range for the rest of the year, with many funds and banks having taken their profits for 2010.
"I'd be very surprised to see it muster the courage to get through $1,400 and I'd also be surprised to see it sell off below $1,360," said Fred Schoenstein, metals trader at Heraeus Precious Metals Management in New York.
Spot gold was bid at $1,387.26 an ounce as of 2:58 p.m. EST (1958 GMT) against Monday's closing bid at $1,384.90 in New York. U.S. gold futures for February delivery closed $2.70 higher at $1,388.80.
Tensions ran high after ratings agency Moody's said it had put Portugal on review for a possible downgrade. This pulled gold from highs in early trade as it brought the euro under some pressure.
But some investors sought additional stores of the safe-haven asset, pushing gold into positive territory, after Fitch Ratings agency said it could cut Greece's foreign currency rating to junk.
Stronger sentiment towards commodities is helping gold, Commerzbank analyst Eugen Weinberg said, adding: "On the other hand, some may prefer to take profits just before the year-end."
"Market consensus is that prices will go higher in the longer term. At the moment, the market is in a waiting stance," Weinberg said.
Moody's downgraded Irish debt on Friday and said on Monday it may cut the ratings on Spanish banks.
Gold has risen about a quarter so far this year, driven largely by concerns over euro zone debt that have allowed it to ride out hefty losses in the €.-Relative dollar strength would usually be negative for gold.
"We are still in narrow trading but euro zone fears are creeping back into the investor agenda," said Andrey Kryuchenkov, an analyst at VTB Capital.
"The downside is definitely limited with the euro zone back in focus, though I think the wider range will hold until next year, with book squaring all but over before year-end."
ETF DEMAND FIRM
Investor demand for gold has firmed this month, with holdings of the world's largest gold exchange-traded fund, the SPDR Gold Trust, rising by just over 12 tonnes since the end of November.
Jewellery consumption by major buyers in India and elsewhere in Asia was soft, however. "People are waiting for Christmas and New Year," a dealer in Singapore said.
Among other precious metals, silver was bid at $29.30 an ounce against $29.33. Platinum was at $1,718.99 an ounce versus $1,692, and palladium was sought for $750.72 versus $748.22 per ounce.
Switzerland, one of the leading clearers of platinum group metals in Europe, imported 3,772 kg of platinum and 1,765 kg of palladium in November, data from the Swiss Federal Customs office showed on Tuesday.
China also released precious metals trade data on Tuesday.
A UBS note said China November trade statistics show a sizable spike in platinum imports.
"The origin of the metal is not entirely clear. The usual suspects - South Africa, Japan, Switzerland and Russia - are cited, but 3.25 tonnes of the total came from 'country or region unknown'.
"The lack of country origin, something we haven't seen in the data before, could mean that the metal is non-good deliverable, but the country or region of origin reflects where the metal has been shipped in from rather than where the metal was originally refined.
"These anomalies make it hard to take these figures at face value," it said.