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Gold inches up but heading for biggest decline in six months

Tuesday, May 31, 2016 - 12:23
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Gold edged higher on Tuesday after falling to a 3-1/2 month low in the prior session but the yellow metal remained on track for its biggest monthly decline since November on the back of broad strength in the dollar.

[BENGALURU] Gold edged higher on Tuesday after falling to a 3-1/2 month low in the prior session but the yellow metal remained on track for its biggest monthly decline since November on the back of broad strength in the dollar.

Bullion got some support earlier in the session as Asian stocks wobbled and were headed for a monthly loss.

Spot gold was up 0.6 per cent to US$1,212.31 per ounce by 0343 GMT. On Monday, the safe haven asset fell as much as 1 per cent to US$1,199.60 an ounce, its lowest since Feb 17.

Spot silver was also headed for its biggest monthly loss since September 2014, down 9.5 per cent, which is also its first such decline this year.

"There is pessimism for gold prices at the moment. The pressure is not done yet... For the coming two days, I still think the bearish sentiment will dominate," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

The safe haven asset has been under pressure over the past couple of weeks as senior US central bank officials, including Fed chief Janet Yellen, indicated that a rate rise may be on the cards sooner rather than later.

St Louis Fed President James Bullard said on Monday global markets appear to be "well-prepared" for a summer interest rate hike from the Fed, although he did not specify a date for the policy move.

Bullion has fallen about 6.2 per cent so far in May, its biggest monthly fall since November.

A bearish target at US$1,175 per ounce has been aborted for spot gold, as it managed to hover above a support at US$1,206, Reuters technical analyst Wang Tao said.

"The precious complex continues to be under pressure albeit with some positive technical support now flowing through," said MKS Group trader James Gardiner.

The dollar hovered near its highest in two months against a basket of currencies on Tuesday on growing expectations of an imminent US rate hike.

US non-farm payrolls data for May is due on Friday and a solid reading could heighten expectations for a June rate rise.

Investors will also be looking out for trading cues from data on US personal income and consumer confidence, due later in the day.

Among other precious metals, spot platinum and spot palladium were set to notch their biggest monthly decline since November.

REUTERS