Gold eased in Europe on Tuesday as the dollar rebounded on the back of uncertainty over the extent of quantitative easing expected from US authorities, denting interest in the metal as a haven from weak currencies.
Spot gold was bid at $1 343,25 an ounce at 0911 GMT (5:11am EDT), against $1 352,95 late in New York on Monday. US gold futures for December delivery fell $10,10 an ounce to $1 344,30.
Prices rallied to a record $1 364,60 an ounce last week as expectations the Federal Reserve would move toward further quantitative easing to bolster the flagging US economy undermined the dollar.
Standard Bank analyst Walter de Wet said there had been a response to higher prices as holders of scrap jewelry were being tempted to sell gold back onto the market.
“There is some dollar strength, (with) strong support for the dollar at $1,40 against the euro,” he said.
“But we also continue to see scrap coming to the market.”
“Despite strong investment demand, the physical market is providing resistance to the latest move higher.”
The dollar rose to a one-week high versus the euro on Tuesday, extending gains that began in the previous session as investors worried the US currency had fallen too far, too quickly.
Analysts said the currency market had already priced in aggressive US monetary easing, and if the Fed does not press ahead with such a policy at its November 21 meeting, the dollar is likely to rebound.
“Today’s focus will be on the release of the latest Federal Open Market Committee minutes for any further insight into the central bank’s thinking on further stimulus measures,” said CMC Markets analyst Michael Hewson in a note.
“But given that the US dollar has declined 10% against the euro since the September lows, one has to wonder how much quantitative easing may already be priced in.”
Investment interest in gold-backed exchange-traded funds was soft, meanwhile, with holdings of the world’s largest, New York’s SPDR Gold Trust, declining by just under 1 tonne on Monday to 1 287,327 tonnes.
The trust’s holdings have dropped nearly 7,5 tonnes so far this month, despite a 2,6% rise in gold prices.
Gold demand from major consumer India also softened as the rupee hit a one-week low against the dollar, making the metal more expensive for local buyers.
“Many are still waiting for lower levels,” said one Mumbai-based dealer.
Among other precious metals, silver was bid at $22,98 an ounce against $23,29, while platinum was at $1 676,50 an ounce against $1 683,15.