LONDON — Gold eased on Wednesday, but a softer tone on equity markets and strong investor interest are expected to support prices of the metal, seen as a safe store of value.

The precious metal used as a hedge against financial uncertainty has come under pressure in recent days as stock markets rallied on optimism about the U.S. government's drive to clean up bad loans held by banks.

Spot gold was $921.70/922.70 (U.S.) per ounce at 1041 GMT, down from $925.65 late in New York on Tuesday when it fell nearly 2 per cent on fund selling and a stronger U.S. dollar.

David Thurtell, an analyst at Citigroup, said gold had found a base. “The equity markets had an indifferent night and gold has found a bit of support. The flows out of gold towards equities seem to have abated for now.”

Mr. Thurtell said the stock market would probably be the deciding factor in setting gold prices on Wednesday.

European stocks were little changed on Wednesday after four days of gains.

Markets are looking ahead to data from the United States on the housing markets and durable goods. Further signs of weakness in the United States, the world's largest economy, could hit confidence further in both equity markets and the dollar.

Gold is up about 5 per cent from a six-week low of $882.90 hit on March 18, but is still more than 7 per cent shy of the 11-month high above $1,000 set in February. It soared to an all-time peak of $1,030.80 in March 2008.

Investors piled into gold in recent months as the financial crisis escalated, the dollar tumbled and markets started to worry about price pressures in the pipeline because of the vast amounts of money being pumped into economies.

“We believe that the aggressive credit easing by U.S. authorities has come with the risk of a huge expansion in liquidity, and with it inflationary concerns that could prove to be positive for gold further ahead,” Barclays Capital said in a note.

Strong interest can be seen in the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, which said its holdings rose to a record 1,124.99 tonnes on March 24, up 10.7 tonnes from the day before.