Gold extended losses to a fourth session on Wednesday as calm in the global stock markets curbed demand for the safe-haven asset that had rallied last week to its highest in a year.
Spot gold had fallen 0.3 per cent to $1,196.76 an ounce by 0048 GMT, after losing nearly 4 per cent in the last three sessions. It dropped to a session low of $1,190.40 on Tuesday before recovering slightly.
The metal is still up nearly 13 per cent for the year, making it the best performing asset this year.
Global equity markets rallied on Tuesday as investors engaged in bargain-hunting and shrugged off a downturn in oil prices after hopes for an agreement among top producers to freeze output faded. The dollar rose against a basket of major currencies.
Asian shares were taking a breather on Wednesday, looking to consolidate two sessions of solid gains as risk appetites showed some resilience.
Stabilisation of the stock markets, after a rout last week on concerns over the health of the global economy, has taken the shine off bullion, which hit a one-year high of $1,260 last week.
John Paulson, one of the world’s most influential gold investors, slashed his bets on bullion at the end of last year, just before the beleaguered market took off for its biggest rally in years, a federal filing had showed on Tuesday.
Hedge fund Paulson & Co, led by the long-time gold bull, has cut its stake in SPDR Gold Trust, the world’s biggest gold exchange-traded fund, by 37 per cent in the fourth quarter.
Investors will be eyeing minutes of the Federal Reserve’s Jan 26-27 meeting to be released later on Wednesday to gauge the US central bank’s view of the economy and how quickly it could raise interest rates.
On Tuesday, the Fed’s Neel Kashkari said he sees a gradual increase in interest rates, while Philadelphia Fed President Patrick Harker said the Fed may be wise to await more evidence of higher US inflation before raising rates again.
Boston Fed President Eric Rosengren said the central bank should be “unhurried’’ as it considers when to again hike interest rates given problems overseas and financial market volatility.