GOLD slipped in afternoon trade yesterday, coming under pressure after the euro surrendered earlier gains against the dollar on worries about euro zone fiscal health.
Spot gold stood at 1102,70/oz by 5pm compared with 1108,20 quoted late in New York on Monday when it hit a peak of 1114,45, its strongest in almost two weeks.
US gold futures for April delivery were 3,1 lower at 1107,20/oz.
“Activity is mostly to do with the dollar, there is a lot of concern about the euro zone,” said Andrey Kryuchenkov, analyst at VTB capital.
“Real yields from TIPS have been increasing lately. Rising real yields increase the opportunity cost of holding gold, so this could exert downward pressure on the gold price,” said Eliane Tanner, commodities analyst at Credit Suisse. Reuters
The dollar was also boosted against other major currencoes by a rise in US consumer confidence in March.
Analysts watching TIPS or Treasury Inflation-Protected Securities said rising real interest rates were weighing on gold market sentiment.
Any rise in US interest rates could dull the attraction of holding a non-interest rate bearing asset priced in dollars, such as gold.
