Spot gold prices moved in a $2 range either side of $686 as the London session wore on and the Wall Street open drew near on Wednesday.
Investors wanting to buy gold ahead of today's interest-rate decision from the US Federal Reserve found the metal 0.4% more expensive from last night's European close.
Economists surveyed by Bloomberg are unanimous in expecting "no change" at the Fed today. Static or falling US rates despite rising inflation is likely to increase gold investment dramatically. (Click here for more...)
Tuesday's late New York rally also put the gold price in Sterling above £345 per ounce, but it failed to hold despite a quiet session in the currency markets.
The rally also pushed the Euro price of gold above €507, but it slipped back €1 as the US open approached.
On the currency markets, the Euro failed to recover above $1.3550 overnight in Asia after dropping hard on Tuesday's weaker-than-expected German manufacturing data.
"The trend for gold will depend on how the Dollar moves against the Euro," reckons Hisaaki Tasaka, analyst at Ace Koeki in Tokyo.
"Long-term sentiment for the Dollar looks bearish, so gold is more likely to be supported.
"We need to see whether this trend will continue after the Fed and ECB meetings, but for the time being [in gold] profit-taking is dominant." (Read more about the Euro's own fundamental weaknesses here...)
In the futures market, Wednesday's trade saw the benchmark April '08 contract slip ¥6 to ¥2,670 per gram – equivalent to $692 per ounce.
Comex gold futures were mixed, with the Dec. '07 contract unchanged at $706.60 per ounce by 08:25 in New York.
"The [investment] funds sold ahead of the Fed meeting and they need to buy it back," says Bernard Sin, chief trader at MKS Finance in Geneva.
"Whatever comes of the Fed meeting, it's not going to change the consensus of the market which is continued weakness of the Dollar and a lot of bullishness about commodities." (Why should gold – and not other paper currencies – benefit as the Dollar weakens? Read more here...)
In the mining sector, meantime, Randgold Resources – the London-listed African gold miner – reported its numbers for Jan. to March. Compared to Q1 last year pretty much everything was down except mining costs.
Production at Randgold's Loula site in Western Mali dropped by nearly 5%; operating profits dropped more than 8%. At its Morila mine, in the south of the country, gold ounces produced fell by nearly 24%. Total cash costs rose more than $90 per ounce to $322.
Kinross Gold Corp., on the other hand – the Toronto-listed gold miner operating across the Americas – announced Q1 revenues 24% higher from the same period last year, with total cash costs unchanged per ounce.
At the end of Feb. Kinross bought Bema Gold Corporation, growing its reserve base by more than 60%.
Read more about the boom in gold mining stock mergers and acquisition here...