Gold edged down in Asia following a 0.4% drop on Monday as prospects for more tightening from major central banks and ebbing haven demand dimmed the outlook for the metal.
Bullion has mainly traded in a fairly narrow range between $1,940 and $1,980 an ounce this month, after dropping in May from a near record high, amid a lack of fresh catalysts.
The Federal Reserve paused interest-rate increases last week, but indicated more hikes were likely and that rates would go higher than previously expected. The European Central Bank also said it wasn't done with raising borrowing costs. Higher rates are usually negative for non-interest-bearing bullion.
Meanwhile, a surge in purchases by Chinese residents, driven by pent-up demand after three years of pandemic restrictions and optimism that the economy would quickly rebound, is starting to slow.
Gold has also lost some of its haven support over recent weeks as fears over a regional banking crisis eased and on signs of an improvement in the US-China relationship.
Still, tail risks including a possible US recession and increasing geopolitical tension could soon spark a rally in bullion even as rates are likely to stay elevated for longer, according to VanEck gold strategist Joe Foster. The precious metal could reach $2,075 an ounce as central banks continue to add to their reserves, helping to support prices, he said in a Tuesday note.
Spot gold edged down 0.1% to $1,948.14 an ounce as of 1:13 p.m. in Singapore. The Bloomberg Dollar Spot Index was 0.1% higher, after climbing 0.2% Monday. Silver, palladium and platinum all fell.
Source : Bloomberg
