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Gold fell to its lowest in over two weeks on Tuesday as the dollar gained strength after upbeat US economic data.
Spot gold edged down nearly 0.2 per cent to $1,309.45 an ounce by 0412 GMT. Bullion earlier fell to as low as $1,307.85, its lowest since September 16. US gold futures were nearly flat at $1,312.60 an ounce.
US factory data
US factories ramped up activity in September, shaking off a one-month contraction in a sign the United States was resisting the downward pull of the sluggish global economy.
The dollar index, which measures the greenback against a basket of currencies, nudged up over 0.2 per cent to 95.903.
“Gold prices at this moment are under pressure,” said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
“Despite the fact that we saw different types of crisis from Deutsche Bank to Brexit, we can see that prices haven’t gone beyond the resistance at $1,350. It is a pessimistic sign that even the speculators could not capitalise on the so-called bad news.”
To sees $1,270 to $1,300 an ounce as the immediate support level for gold over the next few days.
Fed rate hike hopes
Positive economic data usually puts pressure on gold prices as it increases the expectations of a US interest rate hike that would increase the opportunity cost of holding non-yielding bullion.
Still, the US Federal Reserve remains cautious about raising rates since it would not be able to cut them back as aggressively as it did before the recession of 2007 in the event of a new recession in the next few years, New York Fed President William Dudley had said on Monday.
Spot gold is expected to test a support at $1,307 per ounce, a break below which could cause a loss to the next support at $1,299, according to Reuters technical analyst Wang Tao.
Chinese markets being shut for the Chinese National Day holidays from October 1-9 will mean gold markets will be quiet.
“Lack of Chinese participation will likely keep the metal in a consolidation phase this week,” MKS PAMP Group trader James Gardiner said.
Silver fell to as low as $18.68 an ounce, which matched the two-week low hit in the previous session, though it was trading up 0.4 per cent at $18.81.
Platinum fell to $996.95 an ounce, its lowest since June 30. Palladium was down 0.4 per cent to $708.35.
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