Gold opened in Europe at $305.50/$307.50 a troy ounce, down from the New York close at $308.50/$309.50. The metal fell back in early European trading and was quoted at $301.75/$303.75 by 0640 GMT.

Analysts said resistance for gold is at the $315.00 level with support at $295.00.

``Gold still looks immediately strong while $295 holds, and clearly so while $300 holds,'' said senior treasury strategist Clifford Bennett at BNP Australia.

Gold prices raced to nearly two-year highs in New York on Tuesday, jumping over $300 an ounce as fears of central bank sales receded following an announcement this week of a five-year sales cap by 15 European central banks.

Bullion spiked to a high of $327.40 an ounce in New York before pulling back to the closing level. This was still around $40 above levels ruling before the European central bank statement wasissued late on Sunday.

Traders said gold was hit by profit-taking in early Europe, causing it to drop below $300.00.

``It was inevitable that after such a quick rise, that anyone who was long would be taking a profit. We will just have to see where underlying support will be'' one Australian dealer said.

Analysts saw gold supported at the $295.00 level with resistance at $315.00.``Gold still looks immediately strong while $295 holds, and clearly so while $300 holds,'' said senior treasury strategist Clifford Bennett at BNP Australia. Gold prices raced to nearly two-year highs in New York on Tuesday, jumping over $300 an ounce as fears of central bank sales receded following an announcement this week of a five-year sales cap by 15 European central banks.

Bullion spiked to a high of $327.40 an ounce in New York before pulling back to the closing level. This was still around $40 above levels ruling before the European central bank statement was issued late on Sunday.