Gold retreated after earlier short-lived gains today as investor confidence remained fragile after last week’s huge sell-off and ahead of this week’s US Federal Reserve meeting.

Prices of other precious metals were mixed, with silver recovering after falling earlier, while palladium posted moderate gains.

"It’s very difficult now to be optimistic at least in the very near term. Given the severity of the decline (in the past days), one could normally have expected a little bit more of a bounce but that doesn’t seem to be materialising,” said James Steel, analyst at HSBC Bank, referring to gold.

"I suspect we are moving now into a more neutral phase than anything else. The bears don’t seem to have a lot of conviction either. This is more of a mixed feeling than a bearish outlook.”

Gold hit a high of $588,50 an ounce in Asian trade before falling as low as $580,90. It was last at $581,90/583,40 by late afternoon, against $586,20/587,70 in New York late yesterday, when gold gained more than 1% on firmer oil prices.

Gold has lost about 20% since hitting a 26-year high of $730 in mid-May, when investors poured money into the market as a hedge against geopolitical tensions and inflationary concerns linked to rising oil prices.

“Right now we are in a consolidation phase. The dollar could actually be strong in the short term, which should keep gold stuck in the $550-$620 range, but medium term we see dollar weakness,” said Jon Bergtheil, global metals strategist at JP Morgan.

In other metals, silver fell as low as $10,86 an ounce before rising to $11,11/11,21, still down 1 cent.

Platinum was unchanged at $1,158/1,163 an ounce, while palladium rose to $314/319 an ounce from $307/312 in the US market.