Gold capped in Asia as dollar gains ground

By Risa Maeda

TOKYO (Reuters) - Cash gold was little changed in Asian trade on Monday after an early attempt to rise above $920 failed as the dollar gained ground against other major currencies.

Spot gold briefly rose to $920.40 an ounce, but then returned to levels seen late last week.

As of 4:20 a.m. EDT, gold was trading at $917.20/918.00 an ounce, compared with $916.60/917.40 in Asia late on Friday. Gold was trading around $920.30/921.10 in late New York trade on Thursday before U.S. and European markets closed for the Good Friday holiday.

In Asia, markets in Hong Kong and Australia remained closed, but markets in India and Singapore reopened.

Gold hit a record high last Monday at $1,030.80 as concerns about deepening financial market troubles in the United States hit the dollar and raised gold's allure as a safe-haven asset.

But the dollar has steadied against other major currencies, helped by a series of aggressive efforts by the Federal Reserve to ease the credit crisis.

"Investors had fled to cash and gold as fears about the liquidity crunch heightened in the United States, but that flight was coming to a halt given joint efforts by the Fed and the Treasury Department," said Yuki Sonoda, adviser at Daiichi Commodities Co, referring to the proposed takeover of troubled U.S. investment bank Bear Stearns (BCS.N: Quote, Profile, Research).

"A sell-off in all commodities late last week means that a reversal mode has set in," he said.