NEW YORK -- Gold fell toward US$1,100 an ounce Tuesday, snapping a three-session winning streak, as a dollar bounce against the euro and month-end squaring prompted traders to lessen positions.
Bullion has been in a US$60 trading range in the past six weeks, indicating indecision among bullion investors because of a lack of traditional price drivers such as currency weakness or inflation.
“There is no big defining element in the market right now, as there is sufficient sovereign risk worries to keep the market depressed through a strong dollar,” said James Steel, chief commodities analyst at HSBC.
Gold is also on track to end the first quarter up less than 1%, the smallest quarterly gain since the end of 2008.
Spot gold was at US$1,104 an ounce 2:43 p.m. EDT (1843 GMT), compared with US$1,108.20 quoted late in New York on Monday.
U.S. June gold futures settled down US$5.80 at US$1,105.70 an ounce.
A higher dollar due to positive U.S. consumer confidence data prompted profit-taking in gold. The inverse relationship between gold and the dollar appeared to reassert itself of late, following an apparent breakdown earlier in March.
Analysts, however, said chart patterns suggest the rangebound pattern will persist.
Adam Hewison, president of MarketClub.com, said that technical chart cycles indicate gold prices will be trapped in a broad range from US$1,050 to US$1,200 for the rest of the year.
“It’s just frustrating and not a very friendly market for trading. There is no reason in my mind to get excited about gold on the long side at this particular moment.”
Analysts watching TIPS or Treasury Inflation-Protected Securities said rising real interest rates were weighing on gold market sentiment.
Any rise in U.S. interest rates could dull the attraction of holding a non-interest rate bearing asset priced in dollars, such as gold.
“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.
