LONDON, April 2: Gold steadied on Monday after erasing overnight gains as a drop in oil prices lowered the metal's appeal as an inflation hedge. Some investors preferred to lock in profits because of gold's failure to break key technical levels in recent trading sessions, dealers and analysts said.

Gold fell to $663.50/664.00 an ounce by 1001 GMT after rising as high as $665.80 in Asia, against $663.70/664.70 in New York late on Friday, when it rose to $667.90 due to Middle East tensions and weakness in the dollar.

It appears that gold is following the movements of the US dollar again more closely. Thus, today's economic data releases will be decisive for gold, Dresdner Kleinwort said in a report.

The dollar held broadly steady against major currencies as investors awaited this week's key data, including reports on US manufacturing sector growth and jobs, to judge whether the Federal Reserve would cut interest rates this year.

The physical bullion sector saw profit-taking from Indonesia, but light buying emerged from India, the world's largest gold consumer, and Thailand.

Gold imports into Turkey edged up by 3.6 per cent to 12.6 tons in March from a year earlier, the Istanbul Gold Exchange said. While the metal has lacked upside momentum over the past few weeks, we are now moving into what is traditionally the strongest period for physical demand, said James Moore, analyst at.

In other metals, silver slipped to $13.35/13.38 an ounce from $13.38/13.41 in New York, while platinum fell $1 to $1,240/1,243 an ounce. Palladium was flat at $352/355 an ounce.—Reuters