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Gold snaps 2-day losing streak as dollar dips; data in focus
[SINGAPORE] Gold snapped a two-day losing streak on Wednesday as a dip in the dollar supported the metal, although caution prevailed ahead of major US economic data and a European Central Bank meeting.
Spot gold rose 0.3 per cent to US$1,206.34 an ounce by 0401 GMT. The metal had fallen to a one-week low of US$1,194.90 on Tuesday before paring its losses to close above US$1,200.
Despite the gains, the metal could remain under pressure due to expectations of robust US economic data and higher US interest rates, plus investor outflows from bullion funds.
"In the short term, the mood is still bearish though we might trade in a tight range until the jobs data on Friday,"said a trader in Hong Kong.
"Exchange-traded funds are seeing some big outflows, so that could also add to the pressure if US data is better than expected," he said.
Gold is likely to trade in a US$1,200-US$1,220 range leading into the jobs data, according to MKS Group.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.35 per cent to 760.80 tonnes on Tuesday, the second straight day of outflows. That followed a near-8-tonne fall on Monday, the biggest outflow this year.
The bullion market is closely following US data to gauge when the Federal Reserve might raise rates. A US Institute for Supply Management services report is due later in the day, ahead of the February nonfarm payrolls report on Friday.
A robust economy could prompt the Federal Reserve to raise interest rates soon, which could hurt non-interest-bearing bullion and boost the dollar.
Seven of the Fed's 17 members have said they want the option of a rate rise in June on the table, or have pushed in general for an earlier increase in the expectation that wages and inflation will turn higher.
The greenback hovered below an 11-year high versus a basket of major currencies on Wednesday, providing some comfort for bullion.
Traders were also keeping an eye on the euro, which has been subdued over the past few sessions ahead of a European Central Bank policy meeting on Thursday and the implementation of its government bond buying programme due to start this month.