Gold slipped on Tuesday, pressured by a rising dollar and a firmer tone on equity markets, but analysts said inflationary concerns would underpin bullion’s safe-haven appeal.

Gold was at $919/921 an ounce at 1242 GMT, down from $937.15 late in New York on Monday, when it fell more than 1 percent as investors moved away from safe-haven investments.

World stocks hit five-week highs on Monday as investors pocketed riskier assets on growing optimism that a U.S. plan to purge toxic assets from the balance sheet of banks could ease the misery of the financial sector.

“Sentiment (on gold) is a bit weaker off a perceived improvement in other forms of asset classes,” said Michael Khosrowpour, an analyst at Triland Metals, pointing to overnight gains in stock markets and gains in the dollar.

The U.S. plan helped boost Japan’s Nikkei average to a 2-1/2 month closing high on Tuesday. But European stocks dipped, breaking a three-day winning streak after euro zone and UK macro data showed job losses and higher inflation.

Traders said markets were watching out for testimony before Congress by Fed Chairman Ben Bernanke and U.S. Treasury Secretary Geithner at 1400 GMT.

Analysts said fears of inflation fanned by the Federal Reserve’s plans to buy long-dated U.S. Treasuries still lingered even if they had eased a little.

“Gold will probably continue to follow inflation expectations in the near term although remains vulnerable to improved risk asset sentiment,” UBS said in a note.

Analysts also said a higher dollar was putting pressure on gold prices.

Gold is often viewed as an alternative to holding the dollar, and often falls when the dollar rises because it makes metals priced in the U.S. currency more expensive for holders of other currencies.

Bullion has recovered ground from a six-week low of $882.90 marked on March 18 but still has some way to go before approaching the 11-month high above $1,000 reached in February.

It soared to an all-time peak of $1,030.80 in March 2008.

Receding interest in gold was also evident in the holdings of gold-backed exchange traded funds.

The world’s largest gold-backed ETF, the SPDR Gold Trust , said its holdings nudged down about a third of a tonne to 1,114.29 tonnes on March 23 from a record high 1,114.60 tonnes.

Silver was at $13.36/13.42 from $13.63, platinum was at $1,109/1,119 from $1,121, and palladium was at $203/208 versus $207.5.

March 24 (Reuters)