LONDON, March 7: Gold gave up overnight gains on Wednesday as investors took profits in absence of clear signals from the currency and oil markets, dealers said.

Gold hit a high of $648.25 an ounce in Asia before falling to $645.70/646.70 by 1115 GMT, against 646.00/647.00 in New York late on Tuesday, when prices gained more than one per cent on a rebound in global shares.

After the pretty severe correction, prices are building a base above $640. It seems that investors are looking at the price dip in a positive manner to establish longer-term positions, said James Moore, analyst at TheBullionDesk.com.

It is a matter of wait and see how the equity markets and oil prices move in the next few days, but a sharp decline in stocks will help gold going forward and increase investor interest, he added.

Gold has gained 2.5 per cent since dropping to a six-week low of $632.30 on Tuesday, but prices are still down nearly seven percent from a nine-month high of $689 hit last week.

Gold's bounce has raised hopes it was back on track to test new highs again after a surging yen and tumbling global stocks forced risk-averse investors to sell portfolio assets, including gold, to cover their losses in the past week.

Bargain hunters, jewellery makers and retail investors would offer support for gold, he said. Lower prices generated moderate demand for gold in India, the world's largest consumer of the metal. Retail demand has been sluggish in the past few weeks because of factors such as school and college examinations and year-end tax commitments.—Reuters