Singapore: Gold ticked lower on Tuesday as investors continued to fret over the possibility of an earlier-than-expected hike in US interest rates, while palladium was trading near a 13-year high on supply worries.

Fundamentals

Spot gold fell 0.2 per cent to $1,317.60 an ounce, after closing flat in the previous session. A strong US jobs report last week spurred speculation that the Federal Reserve could increase rates soon on the back of a solid economic recovery. A hike would encourage investors to withdraw money from non-interest-bearing assets such as gold.

Physical demand in top gold consumer Asia has also been weak as the metal is holding above $1,300. Many are waiting for a drop in prices before making any purchases. Meanwhile, gold is still seeing some safe-haven bids from geopolitical tensions in the Middle East and Ukraine.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 1.8 tonnes to 798.19 tonnes on Monday. Gold producers and consumers are resistant to a wholesale redesign of the existing price setting benchmark known as the ‘fix’ despite increasing regulatory focus, a discussion held by the World Gold Council found on Monday.

The Dubai Multi Commodities Centre said it would delay launch of a spot gold contract to the third quarter to ensure that the technical aspects run smoothly. Palladium was trading near a 13-year high of $868.50 hit on Monday. The metal, used in catalytic converters, is boosted by data last week showing US auto sales at an eight-year high in June. Worries about the supply of platinum group metals from major producer South Africa also aided the market.