Gold held steady near a one-week high on Tuesday as a weak U.S. dollar spurred early buying from investors, while jewelers were also expected to snap up the metal before festive seasons in India and Indonesia.
But trading was thin ahead of a trail of U.S. data such as June personal income, June factory orders and July auto sales, offering clues on the health of the economy. Platinum and palladium failed to sustain early gains.
Spot gold was unchanged at $1,181.25 by 1:29 a.m. ET, after rising to a 1-week high of around $1,190 on Monday, partly driven by physical buying in Asia. The precious metal was well below a lifetime high of $1,264.90 struck in June.
I would look at the upside for gold being capped, said Ong Yi Ling, an investment analyst at Phillip Futures in Singapore, who pegged key support at a three-month low of around $1,150.
And hence, we might actually see gold edging down a little bit if the economic data come in better than anticipated, like the consumer spending and personal income figures.
For a graphic of the 24-hour gold technical outlook, see:
here U.S. gold futures for December delivery fell $1.5 to $1,183.9 an ounce after ending flat as gains in Wall Street erased early increases.
The U.S. dollar was hovering near a three-month low against a basket of currencies on Tuesday on worries the U.S. growth outlook is deteriorating and could force the Federal Reserve to keep interest rates low.
The Nikkei jumped 1.2 percent on easing worries about the global economic recovery after strong European bank results helped to send Wall Street to a 10-week closing high.
The market is quiet today with light buying interest from investment. But we did see some buying from India as it builds up stocks for the festival, said a physical dealer in Singapore.
India's gold demand is picking up for the busy festival season, starting with Raksha Bandhan on August 24, and extending till Dhanteras in November, the single-biggest gold buying day. Jewelry makers in Indonesia also stock up before the Ramadan fasting month in August.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust (GLD.P), said its holdings were unchanged at 1,282.279 tonnes, down nearly 3 percent from a record of 1,320.436 tonnes in late June 29.
Although it has declined a bit below the 1,300 level, it's still pretty high, said Ong at Phillip Futures. Unless, we really see a mass exodus which I don't think will happen for the time being.
The IMF sold 17.7 tonnes of gold in June under its gold sales program, bringing to 71.4 tonnes the amount of bullion it has sold on the open market since March, an IMF spokesman said on Monday.
(Editing by Ed Lane)