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Gold prices rise on bargain hunting, US dollar pullback

Spot gold is up 0.2 per cent at US$1,195.51 an ounce, as of 0654 GMT, from US$1,191.35 in previous session

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Investors' bearish stance on gold continues to reflect in record short positions and in the outflow of gold exchange traded products.

Bengaluru

GOLD prices edged up on Tuesday from an 18-month low hit in the previous session as a break below a key psychological level triggered buying interest, while the US dollar pared gains after scaling a 13-month high.

Spot gold was up 0.2 per cent at US$1,195.51 an ounce, as of 0654 GMT. In the previous session, the bullion hit US$1191.35, its lowest since Jan 30, 2017.

US gold futures were up 0.3 per cent at US$1,202.50 per ounce.

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Market voices on:

"Some stop-loss selling pushed the market lower below US$1,200 ... We see some fresh buying interest from here as well as physical interest," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

"However, the market is still under pressure as the US dollar is still very strong. Also, interest rates are poised to go higher and market sentiments are bearish on gold."

The US dollar index, which measures the greenback against a basket of six major currencies, was down about 0.3 per cent at 96.168, after climbing to a 13-month high on Monday.

"People are punting on better growth prospects in the United States, hurting gold's prospects ... Technically, gold is looking bad and may test US$1,165," said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services in New Delhi.

The euro stood near a one-year low against the US dollar and the Swiss franc on Tuesday, remaining under pressure as the Turkish lira wobbled on worries that Turkey's economic woes could hit European banks and spread to other emerging economies.

Gold, which is traditionally considered as an insurance against political and economic uncertainty, has failed to benefit this year.

Instead, investors have made a beeline for US Treasuries, seen as the ultimate safe haven, which meant they had to buy US dollars.

"If the Turkey contagion spreads further, we may see some buying (in gold). But, as of now the US dollar continues to be a safe haven buying option," said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services in New Delhi.

Investors' bearish stance on gold continued to reflect in record short positions and in the outflow of gold exchange traded products.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.19 per cent to 784.60 tonnes on Monday from Friday. Holdings have fallen about 10 per cent from their peak in April and are at their lowest since Feb 2016.

Spot platinum rose 0.9 per cent to US$804.80, after touching a three-week low at US$791.50 on Monday.

Silver was up 0.7 per cent at US$15.10. It hit an over 13-month low of US$14.94 in the previous session.

Palladium rose 0.1 per cent to US$892.30. REUTERS