Gold steadied on Wednesday as a weaker dollar and robust physical demand balanced against negative pressures of strong equity markets and a drop in exchange-traded fund holdings to their lowest in four years.
The prospect of surging demand from China in coming months, after net gold inflows from Hong Kong hit a record in March, may further support bullion prices, which have been hurt by sagging investor confidence in the metal this year.
"Stronger equities and ETF liquidation put pressure on prices yesterday and bolstered physical buying in Asia overnight," MKS Capital head of trading Afshin Nabavi said.
"We don't have much macro news coming out this week, and that should leave the metal in a range between $1,440 and $1,480."
Gold edged down 0.1 percent to $1,450.96 by 0957 GMT. It fell nearly 2 percent in the previous session, when investors shifted to equity markets.
U.S. gold futures for June delivery were at $1,450 an ounce, up 0.1 percent.
"We expect gold prices to remain rangebound below $1,480 in dull trading ... It is most likely that gold will still move against the greenback in thin volumes this week," VTB Capital said in a note.
The dollar fell against the euro ahead of German industrial output data due at 1000 GMT, which would follow an unexpected rise in Germany's industrial orders for March.
European equities were boosted on Wednesday by signs of a better outlook for China after trade data showed a steady recovery in the world's No.2 economy. German and U.S. stocks hit all-time highs on Tuesday.
"Given the reduction of tail-risk in Europe, the rising labour market in the U.S. and the low inflation rate, investors prefer equities to gold in the near term," Sharps Pixley said in a note.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.42 percent to 1,057.79 tonnes, or 34 million ounces on Tuesday, the weakest since early 2009.
Cash gold has dropped more than 13 percent so far this year, after posting annual gains in the past 12 consecutive years as easy monetary policy prompted investors to buy bullion.
TIGHT PHYSICAL MARKET
The physical market remained tight given a recent surge in demand for gold bars, coins and nuggets, but some analysts said volumes had come slightly off after a recent rush in Asian countries.
"Our index of India physical flows continues to suggest demand that is well above average, but volumes have come off the peak of the previous two weeks," UBS said in a note.
The physical market in Singapore was also less active this week, dealers said.
In other precious metals, silver lost 0.8 percent to $23.76 an ounce, while platinum rose 0.5 percent to $1,474.50 an ounce.
Palladium rebounded the previous session's losses as Norilsk Nickel, the world's largest producer of metal, reported a nine percent fall in first quarter production. It stood at $682.72, up 0.6 percent.