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Gold held steady on Wednesday after closing higher for the first time in 10 sessions the previous day, supported by an easing dollar and weaker Asian stocks.
The safe haven asset has gained about 15 per cent so far this year, but has been under pressure since the release of the minutes from the US Federal Reserve’s April meeting boosted expectations of an imminent rate rise.
Bullion had its biggest decline in six months in May, losing about six per cent.
Spot gold
Spot gold was little changed at $1,215 an ounce at 0330 GMT. Bullion gained 0.8 per cent on Tuesday in its biggest one-day gain since May 13. US gold was flat at $1,217.60.
“The fact that gold did not undergo another sharp selling bout on Tuesday in light of strong US macro data (and an equally strong dollar) tells us that participants may already have discounted a rate rise,” INTL FCStone analyst Edward Meir said in a note.
“However, we do not want to buy gold just yet, but would rather wait for a pullback to the $1,180-$1,190 level where we see more credible support.”
US consumer spending
US consumer spending recorded its biggest increase in more than six years in April as households stepped up the purchases of automobiles, suggesting an acceleration in economic growth that could persuade the Fed to raise interest rates soon.
An increase in US rates would raise the opportunity cost of holding gold, which does not earn interest. It would also bolster the dollar, making gold more expensive for buyers in other currencies.
Non-farm payrolls data
US non-farm payrolls data for May is due on Friday and a solid reading could heighten expectations for a June rate rise.
“We expect further correction as the numbers should come in favourably for the Fed to move as early as July and so, taking that into consideration, I think we’re not done yet in the adjustment process,” said Dominic Schnider of UBS Wealth Management in Hong Kong.
Asian stocks were on a weak footing on Wednesday as a slip in crude oil prices dampened investors' appetite for riskier assets, while the recently bullish dollar stalled against the euro and yen following a mixed bag of US economic data.
Among other precious metals, spot silver rose 0.1 per cent to $15.99 per ounce.
Spot platinum and spot palladium were little changed at $976.20 an ounce and $547.38 per ounce, respectively.
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