Gold fell in European trade on Tuesday but was still above the seven-month low reached on Monday with physical demand seen stemming further falls for now, dealers said.
Dealers said that gold seemed to have found a base for consolidation, but did not rule out further seepage.
Some analysts expect further drops in the medium term on the increased likelihood of a US interest rate rise, which could hasten demand for the dollar. A higher US currency tarnishes dollar-priced gold's appeal for non-US investors.
Spot gold was trading at $374.75/375.45 a troy ounce by 1431 GMT, compared with $378.40/379.15 last quoted in New York on Monday. Bullion was fixed in London on Tuesday afternoon at $375.25.
Gold fell to its lowest since October last year on Monday as the dollar surged against major currencies, with other precious metals also making multi-month lows as funds left the market.
"I think a lot of people got caught out yesterday and they are just trying to get something back today," one dealer said.
"Its interesting to note that when the euro moves higher, gold only inches up in response, but if the euro gives back a few ticks gold drops a lot. The market just seems to be fundamentally bearish at the moment," he added.
Asian dealers said early on Tuesday that premiums for gold bars in Asia are at their highest this year as jewellery makers capitalise on falling outright prices to build up stocks.
Gold bars in Hong Kong and Singapore were 40 US cents a kg over London physical prices, compared with 30 US cents last week.
European analysts said that geo-political tensions would keep gold's safe haven profile in focus, but funds - led by dollar moves - would be the key driver for direction.
"Ultimately the market needs to hold the $365.00 level to avoid a fund whitewash but the backdrop of terrorist and geo-political tensions will continue to keep gold an attractive investment to the more cautious speculator," James Moore of TheBullionDesk.com said in a daily report.
The dollar hovered slightly higher against the euro on Tuesday as traders remained focused on how expectations for a rise in US rates will help the US currency. The dollar was last at $1.1812 against the euro after touching an intraday peak at $1.1790.
In other precious metals, platinum bounced back from sharp drops on Monday to $780.00/785.00, compared with $765.00/770.00 in New York on Monday.
Dealers said the market may have found a base after heavy speculative selling had outweighed industrial buyers.
"It looks like the metal has found a bottom at around $765.00 and a consolidation might be on the cards," Alexander Zumpfe of Dresdner Kleinwort Wasserstein said in a daily report.
Palladium was slightly higher, trading at $235.00/240.00 from $232.00/237.00 in late US trade. Silver had eased to $5.55/5.58, compared with $5.73/5.76 in New York.
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