LONDON: Gold edged lower on Tuesday, snapping earlier gains because the dollar steadied against the euro after mixed European economic data, while investor sentiment remained careful though physical demand slowed in some markets.
Gold was down 0.1 percent to $1,428.64 by 1037 GMT, having risen by one percent to a session high of $1,444.96 an ounce in earlier trade. The metal has faced the pressure of a stronger dollar over the past few sessions, hitting a two-week trough on Friday. It has fallen about 14 percent this year.
US gold futures for June delivery were down 0.4 percent to $1,428 an ounce.
"The weaker dollar helped to give a bit of a boost to gold earlier on but at the first level of resistance at $1,445 the metal seemed to run out of steam and now we are testing the intraday support level at around $1,430," Saxo Bank senior manager Ole Hansen said.
"Any sign of strength in the US data is likely to create headwinds at the moment that will be one of things to look out for as this is having an impact on the dollar as well."
The dollar moved higher after initial losses against the euro, which fell after weaker-than-forecast ZEW sentiment data from Germany.
Meanwhile, a surprise rise in April's US retail sales on Monday strengthened the view that the the world's largest economy remains resilient, while damping speculation the Federal Reserve will extend its bullion-friendly bond-buying programme.
Accommodative monetary policies favour gold as low interest rates encourage investors to put money into the non-interest-bearing asset, speculating on price gains.
Gold has recovered about $120 since a sell-off in mid-April dragged prices to more than two-year lows at $1,321.35, but it is still well below last month's peak of around $1,600, as
investors shifted into equities and cut exposure to bullion.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, stood unchanged at 33.811 million ounces on Monday, just off their lowest level since March 2009.
The fall in gold prices last month spurred a surge in physical buying in Asia and elsewhere, helping to pluck prices off lows, but physical demand for some gold products began to subside.
"While gold coin sales have been brisk, undoubtedly helping the recent recovery, we have to suspect that the 'bargain-buying' off the lows has decelerated somewhat after the initial spurt," said Edward Meir, a metals analyst at futures brokerage INTL FCStone.
"And we suspect it will continue to do so, particularly if prices start to wobble once again."
In other precious metals, silver fell 0.4 percent to $23.50 an ounce, platinum was up 1.2 percent to $1,493.24 an ounce and palladium dropped 0.3 percent to $712.72 an ounce.
Platinum was boosted by a wildcat strike at the South African operations of producer Lonmin.
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