Singapore: Gold was struggling to shake sharp overnight losses on Wednesday, trading near its lowest level in 2-1/2 months on a stronger dollar and robust U.S. economic data that curbed the metal's safe-haven appeal.
Spot gold was little changed at $1,265.04 an ounce, not too far from $1,262.42 hit in the previous session - its lowest since mid June. Gold fell 1.7 percent on Tuesday - its biggest one-day drop since July 14. US gold was flat at $1,265.80, also near 2-1/2 month lows. The dollar hovered at 14-month highs against a basket of major currencies early on Wednesday, underpinned by upbeat U.S. data and further supported by a selloff in the yen and sterling. A stronger greenback hurts dollar-denominated gold as it makes the metal more expensive for holders of other currencies.
Data on Tuesday showed that U.S. manufacturing activity hit a nearly 3-1/2-year high last month and construction spending rebounded strongly in July, signs the economy entered the third quarter on strong footing. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund and a measure of investor sentiment, said its holdings fell 1.8 tonnes to 793.20 tonnes on Tuesday.
Geopolitical tensions in Ukraine and the Middle East failed to support gold as the stronger dollar overshadowed any safe-haven bids. In news from the physical markets, Indian gold imports and premiums are likely to surge during the rest of the year as buying picks up for the wedding and festival season, the head of the country's biggest gold refiner said.
