Spot gold shrugged off news that Japan was considering shifting some of its huge reserves into gold, and lost around $1 an ounce in Asia on Thursday as the dollar held steady against other main currencies.
The bullion market has been craving gold-related news but a lack of clarity in the Japanese move meant dealers were again relying on the currency markets for direction.
"I think $408 probably holds, there seems to be some support around there again it will be following the US dollar today," said Martin Mayne, associate director at N M Rothschild in Sydney.
Spot gold was traded at $408.75/409.50 an ounce versus $410.20/410.80 last quoted in New York.
Gold reached a 15-year peak of $430.50 an ounce on January 6 when the dollar fell to a lifetime low against the euro, and although it has since fallen the yellow metal is still considered expensive.
"Total gold fabrication is estimated to have dropped by almost five percent in 2003 to just over 3,000 tonnes, as the seven percent slump in the jewellery sector more than outweighed gains elsewhere such as in electronics.
India, the world's largest importer of gold, on Wednesday allowed jewellery exporters and domestic bullion traders to buy gold and silver directly from abroad without going through nominated agencies.
In other precious metals, palladium was quoted at $238/243, silver at $6.49/6.51 and platinum at $851/856.
The benchmark December gold contract on the Tokyo Commodity Exchange (TOCOM) was down one yen per gram at 1,393 yen.
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