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London: Gold rebounded on Tuesday after the dollar resumed its downward trend, but weaker oil prices reduced the metal's appeal as a hedge against inflation and capped gains, analysts said.
Investors were cautious after their confidence was shaken by a recent sell-off in commodities, with gold falling more than 10 per cent last week since spiking to a record high of $1,030.80 an ounce on March 17.
Platinum
Platinum has fallen more than 20 per cent from this month's record high of $2,290 before marginally recovering, silver has slipped 20 per cent from a 27-year high and palladium has plummeted nearly 30 per cent before moving higher.
Gold touched a low of $911.50 an ounce on Tuesday before hitting a high of $935.70. It was at $930.40/$931.30 by 1500 GMT, from $920.90/$921.70 in New York late on Monday.
"We see some consolidation in the market between $910 and $950, but the potential clearly remains on the upside," said Frederic Panizzutti, analyst at MKS Finance.
"Any continuation in the dollar's downside trend would enable gold to move towards the upper side of the range and possibly break it, but after the massive price correction, the market would be cautious."
The dollar extended losses against the euro after US consumer confidence hit a five-year low in March. The currency fell broadly, snapping four days of gains, with nerves over the health of the US economy dominating sentiment.
The dollar tumbled to a record low against the euro last week when the announcement of Bear Stearns' takeover at a rock-bottom price stoked fears that other major financial firms could be casualties.
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