By Jan Harvey
LONDON (Reuters) – Gold dipped on Tuesday as a weaker dollar only partially offset a price retreat seen in Asian trading hours, after a failure to overcome chart resistance prompted speculative selling after a four-day rally.
Confidence in the metal was also dampened by a third day of outflows from gold-backed exchange-traded funds, with holdings of the largest, SPDR Gold Shares, falling another 3.8 tonnes on Monday.
Spot gold was down 0.1 percent at $ 1,231.67 an ounce at 1030 GMT, having dropped $ 8 an ounce in less than an hour after it touched session highs overnight at $ 1,235.26.
U.S. gold futures for April delivery were down $ 2.60 at $ 1,231.40.
Some gold holders in China liquidated their positions in thin trading after the metal failed to break above the previous day’s peak, traders said, close to tough resistance at a retracement of the metal’s February-to-March decline.
“Gold failed to break through resistance and ran into selling afterwards,” Alexander Zumpfe, precious metals trader at Heraeus, said. “Resistance is around $ 1,237/1,238.”
A drop in the dollar to six-week lows versus the euro on expectations of a more cautious approach to rate hikes from the Federal Reserve helped lift gold in later trade.
Prices were also underpinned by uncertainty over U.S. President Donald Trump’s foreign policies and concerns over the impact of populist parties on European elections this year.
Gold rallied in the wake of last Wednesday’s less hawkish than expected Fed policy statement, which dampened speculation that the U.S. central bank would raise interest rates quickly this year.
That took prices to $ 1,235.50 on Monday, their highest since March 6.
Gold is sensitive to rising U.S. rates, as these increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced. They slipped in the run-up to the Fed’s rate hike last week, before rebounding.
“The previous two hikes marked cycle lows for gold, and European election uncertainty, U.S. President Trump’s foreign policies, as well as seasonal demand in India materialising in April are likely to make Q2 the strongest quarter for gold prices this year,” Standard Chartered said in a note.
Silver was down 0.2 percent at $ 17.37, while platinum was 0.5 percent lower at $ 962.60.
Palladium, bucking the falling trend among other precious metals, was up 0.6 percent at $ 783.80, having touched a three-week high of $ 785.20 an ounce.
(Additional reporting by Nallur Sethuraman in Bengaluru; Editing by Dale Hudson)