Gold faces downside pressure after reaching three-week high

Gold faced some downside pressure as some investors closed their positions after the metal rose to three-month high on concerns firmer dollar would push prices to the downside.

The previous session, gold added $8.90 or 0.59% after closing at $1526.36 an ounce, while gold price was setin London at $1527.00 per ounce inclining from $1520.75 during the AM fixing.

Spot gold is traded at $1524.34 an ounce after reaching a high of $1526.82 and a low of $1520.99, where the shiny metal may is finding support at $1505 level.

Gold benefited this week from the mounting debt woes that sparked speculations that Greece might be the first euro-area economy to default, especially after the refusal of debt restructuring by many European officials.

Fitch lowered Greece's credit rating by three levels to B+ from BB+, keeping the door opened for further cuts, stating that the soft debt restructuring which is under review by European officials would provoke a default.

The contagion also spread to other countries which caused Standard & Poor's to cut Italy's outlook to negative, while Belgium's debt outlook was also revised to negative by Fitch.

Although gold rose for three consecutive days, it may face some sell off as the dollar strengthens. The dollar index, which tracks the dollar movement versus a basket of major currencies, is now near seven-week high moving around 76.20 compared with the day's starting level of 75.93.

The greenback's rebound is capping commodities from bouncing, where oil slipped to $98.70 a barrel after opening today at $99.33.

Among other precious metals, platinum plummeted to $1764.90 from the day's opening of $1770.70, palladium inched down to $735.00 from $735.20 and silver ticked down to $36.47 from $36.55, as of 07:40 GMT.

With regard fundamentals, the data released recently is providing some clues that global recovery is losing momentum and second-quarter would show an ease in global growth.

Today, eyes will be UK GDP data for the first quarter, which is expected to remain unrevised at 0.5%, then US durable goods.