By A. Ananthalakshmi
SINGAPOREÂ (Reuters) – Gold was trading near its lowest level in almost four weeks on Tuesday, struggling to get past sharp overnight losses triggered by profit-taking and stronger global equities that dented the metal’s safe-haven appeal.
Spot gold had ticked up slightly to $1,308.90 an ounce by 0637 GMT, after sliding more than 2 percent on Monday – its biggest daily drop since December. Gold touched a low of $1,302.90 in the previous session, its weakest since June 19.
Asian shares rose on Tuesday after Citigroup’s earnings and a fresh round of merger and acquisition activity in the U.S. healthcare industry lifted global share prices.
Gold had climbed to a near four-month high of $1,345 last week as financial troubles at Portugal’s top bank rekindled fears of another euro zone banking crisis, but those fears have now faded.
“There is more downside risk now, especially if prices fall below $1,305,” said a precious metal trader in Singapore.
“What is worrying is that even with the $30 price drop, there seems to be no real increase in physical buying. That could also add pressure to prices.”
Domestic prices in top buyer China fell to a discount to the global benchmark on Tuesday, from being on par in the previous session, in a sign of weak physical buying.
Demand in other parts of Asia was also subdued, dealers said.
Bullion investors were eyeing Federal Reserve Chair Janet Yellen’s testimony in a U.S. Senate committee later on Tuesday for signs of when the U.S. central bank would begin increasing interest rates.
They were also watching developments in the Middle East and Ukraine for any escalation in violence that would create fresh safe-haven demand for gold.
Israel approved an Egyptian-proposed deal that would halt the week-old Gaza shelling war on Tuesday but the Palestinian territory’s dominant Hamas Islamists responded suspiciously, saying they had not been consulted by Cairo.
Ukraine said on Monday that Moscow was once more building up its troops on the joint border and accused Russian army officers of fighting alongside separatists in the east of the country.
Meanwhile, SPDR Gold Trust – the world’s largest gold-backed exchange-traded fund – said its holdings rose 8.68 tonnes to 808.73 tonnes on Monday.
