London gold fixed at $255.45 a troy ounce in the morning versus Tuesday afternoon's $254.80.

"It's dead again today," said one London dealer, who added that liquidity remained poor with many market participants away on holiday.

Dollar weakness against the yen and other currencies, which helped push gold through $255.00 resistance on Tuesday, failed to give gold much support on Wednesday.

Gold is testing the upper end of a $252.00/$256.00 range with the next upside objective pencilled in around $258.00.

"There will probably be scale-up selling from now. I don'T think it will move much higher," one dealer said.

Japanese Finance Minister Kiichi Miyazawa said the ministry would act against rapid movements and disturbing factors in foreign exchange markets.

Pressure on the dollar stemmed from strength in Japanese stocks andlingering jitters about U.S. Asset markets, its fall making gold cheaper in local currency terms.

The benchmark gold contract on the Tokyo Commodity Exchange (TOCOM) plunged to a record low, hit by the yen's advance.

Widespread liquidation in gold futures sent benchmark August to 873 yen, though some trading houses appeared to start buying on firmer spot bullion prices, a commodity analyst said.

"It's difficult to see the bottom of TOCOM gold futures at the moment, but we expect there will be some support at about 850 yen (for the benchmark contract)," he said.