Gold was holding steady above an 11-week low on Wednesday, helped by a softer dollar, but the gains were limited as investors worried over a looming US interest rate increase and outflows from bullion-backed funds continued.
Spot gold was steady at $1,175.63 an ounce at 0338 GMT after gaining 0.4 per cent in the previous two sessions. The metal had fallen to $1,162.35 on Friday, its lowest since March 19, after a strong US non-farm payrolls report.
The dollar was nursing losses but that was not enough to push up gold significantly as investors continued to pull money from funds.
Holdings in SPDR Gold Trust, the top gold-backed exchange-traded fund (ETF), fell 0.42 per cent to 705.72 tonnes on Tuesday, the lowest since January.
“We continue to see outflows from ETFs and this may limit price moves to the topside,’’ said MKS Group trader Sam Laughlin.
Holdings of the top eight ETFs were at their lowest in five years. Outflows from the funds can undermine any rally in gold. The $1,170 level continues to provide support, but the price will face resistance at $1,185, Laughlin said.
Demand for precious metal
Physical demand is not providing much support for gold. Expectations of a further drop in bullion and better returns from surging equities in China have tamed the demand for the precious metal in Asia.
Friday’s drop to an 11-week low failed to draw much interest in the world’s top two buyers, equities-obsessed China and India, where worries about a poor monsoon and lack of wedding demand are holding the demand down.
US retail sales data
Traders were also waiting for US retail sales data due on Thursday for clues about the strength of the economy and how that will affect the Federal Reserve’s monetary policy. Strong data could prompt the Fed to raise rates as soon as September, which could hit the demand for non-yielding bullion.
Greek debt crisis
The Greek debt crisis was also in focus as a possible trigger for safe-haven bids. Prime Minister Alexis Tsipras had called on his fractious Syriza party to rally behind the government on Tuesday as time runs short to unlock funding from international lenders and avert a debt default.