Singapore: Gold inched lower on Tuesday, moving further away from a two-week peak as its safe-haven appeal was dulled with the dollar holding close to a four-year high and growing signs of strength in the US economy.
Fundamentals
Spot gold had slipped $1 to $1,185.19 an ounce. The metal has eased off a two-week high of $1,193.95 hit in the previous session.
The dollar held its own on Tuesday after European Central Bank officials raised the prospects of further stimulus steps and as investors waited to see if Japan's leader would call a snap election after the country unexpectedly slipped into recession. The dollar index, which measures the greenback against a basket of major currencies, was pushing closer to a four-year high set on Friday.
A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies and also weakens its appeal as a hedge. US economic data on Monday also hurt gold. While US manufacturing output rose only modestly, other data overnight showed a rebound in factory activity in New York State.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.33 percent to 723.01 tonnes on Monday - the first increase since Nov. 3, though they were still near a six-year low.
India's central bank is in talks with the government to increase curbs on gold imports, Deputy Governor S.S. Mundra said on Monday, reflecting policymakers concerns that a jump in inbound shipments will worsen the country's trade deficit. More curbs could hit demand from India, the second biggest gold consumer, and could add pressure on gold prices.
A vote in favour of boosting Switzerland's gold holdings at a Nov. 30 referendum won't necessarily lift bullion prices, Deutsche Bank said in a note, adding there was a "considerable" chance the motion would pass.
