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Gold has held steady at near two and a half month highs as dollar weakness offset improved risk appetite among investors, reflected in recovering global stock markets.

Spot gold was unchanged overnight, having peaked at $US1,233.26 in the previous session, its highest since July 26.

US gold futures settled up 70 cents, or 0.1 per cent, at $US1,231 an ounce.

‘Most of the move in gold is behind us,’ INTL FC Stone analyst Edward Meir said.

‘The Saudi situation seems to be on the mend and stock markets getting an element of support from earnings deprive gold of another reason to rally from here.’

‘Gold is being supported by a relatively softer dollar.

‘We could see more of a range-bound market from here.’

The US dollar index dropped to more than two-week lows on Tuesday while emerging market currencies outperformed, and rising stock markets reflected improving risk appetite.

On the technical front, gold prices were trading around the 100-day moving average of $US1,227.

‘The near-term technical posture for the yellow metal has dramatically improved (over) the past few sessions, which continues to invite the chart-based buyers,’ Peter Hug, global trading director at Kitco Metals, said in a note.

‘Also, the recent volatility in world stock markets and some heightened geopolitical tensions are continuing to provide some demand for safe-haven gold.’

Gold is usually viewed as a safe store of value during political and economic uncertainty.

‘We continue to believe price risks are skewed to the upside,’ Standard Chartered said in a note.

‘Should the US dollar stabilise or even weaken, the macro backdrop looks more favourable for gold, particularly if its safe-haven status strengthens.’

Some analysts said the recent gains in gold could also be attributed to investors unwinding bearish positions after speculators had piled up record short positions.

Holdings of SPDR Gold Trust, the largest gold-backed exchange traded fund, rose for a second straight session on Monday, adding 4.1 tonnes.

Holdings have gained about 2.5 per cent in the past seven days, which, some analysts said, is a shift in perception in sentiment among gold ETF investors.

SPDR Gold holdings had shed about 3.9 million ounces from a peak in April.

In other metals, silver was down 0.1 per cent at $US14.64 an ounce, having touched its highest since October 2 at $US14.85 earlier in the session.

Platinum gained 0.4 per cent to $US842.20 after hitting its highest since July 10 at $US850.10 on Monday, while palladium was down 0.3 per cent at $US1,080.50.