Gold prices fell for a third session on Wednesday, partly because hedge funds reduced their holdings amid easing concerns of a major escalation of the Middle East crisis, while investors awaited key U.S. economic data for interest-rate clues.
Spot gold fell 0.3% to $2,315.34 per ounce by 1153 GMT, after having hit its lowest since April 5 in the previous session. U.S. gold futures fell 0.6% at $2,328.60.
Part of the reason that prices are coming off is that hedge funds have reduced their allocation for gold, while some of the tensions in the Middle East have faded a bit in recent days, UBS analyst Giovanni Staunovo said.
The U.S. dollar regained some ground on Wednesday while benchmark Treasury yields also rose, making the dollar-priced bullion less attractive for other currency holders and as an investment option compared with debt. [US/] [USD/].
Gold prices have dropped more than 3% since the start of this week.
However, strong demand from Asia, primarily China, along with the desire of central banks in emerging markets to diversify more in gold, is preventing prices from falling further, Staunovo said.
Spot gold may retest resistance at $2,336 per ounce as it managed to stabilize around key support at $2,311, according to Reuters' technical analyst Wang Tao. [TECH/C]
Investors are now looking forward to the U.S. gross domestic product data due on Thursday and the Personal Consumption Expenditures report due on Friday for fresh clues on the Federal Reserve's rate trajectory.
In other precious metals, spot silver fell 0.6% to $27.11 per ounce.
"We expect silver to outperform gold as investment flows surge. Slower mine production growth and strong industrial demand suggest supply is lagging demand, which will keep the market in a structural deficit," ANZ said in a note.
Spot platinum rose 0.3% to $909.91, while palladium edged 0.1% lower to $1,018.09.
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