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Gold near 1-1/2-week low as dollar keeps strength
[MANILA] Gold steadied near a 1-1/2-week low on Tuesday, under pressure after suffering its steepest loss since March in the prior session as the dollar remained strong, curbing appetite for the precious metal.
Bullion has fallen in five out of the past six sessions, having failed to hold above resistance at US$1,300, and not benefitting much from data last week showing that the US economy added the fewest jobs in seven months in April.
But gold is still up 19 per cent this year as expectations for a near-term increase in US interest rates has eased.
Spot gold was nearly flat at US$1,264.07 an ounce by 0244 GMT, after hitting an early low of US$1,259.51, its weakest since April 28.
Bullion fell 1.9 per cent on Monday, its sharpest single-day drop since March 23.
HSBC analyst James Steel said the price of gold "looked increasingly overextended up around US$1,300," adding that demand at gold-backed exchange-traded funds has moderated in the past six weeks.
"We remain longer term relatively positive but believe we are entering a corrective phase that may take prices closer to the US$1,220 level near term," Mr Steel wrote in a note.
"If the dollar continues to rally back, gold may be further pressured." The dollar drifted to its highest in nearly two weeks versus a basket of major currencies, making dollar-denominated assets such as gold more expensive for holders of other currencies.
US gold for June delivery was little changed at US$1,265.90 an ounce.
Physical demand for gold in China is uncertain looking forward and consumption in India is "sluggish at best", Mr Steel said on appetite in the top two bullion consumers.
Indians bought a third less gold than last year during the annual Hindu and Jain holy festival of Akshaya Tritiya on Monday, industry officials estimate, as droughts have hit the earnings of millions of farmers and the metal's price rallied.