NEW YORK/LONDON: Gold rose around 1 percent on Wednesday, reversing the previous session's losses as a dollar drop and declines in equities triggered physical buying.
But analysts said the root of weakness in wider markets - improved US data suggesting the Federal Reserve might taper its monetary stimulus - was also seen as a catalyst ultimately to take bullion prices lower.
Bullion also faced technical pressure as its rally faded near its 14-day moving average for a second straight day, while persistent outflows from gold-backed exchange-traded funds (ETFs) were expected to heap more pressure on prices.
For now, lower prices of the precious metal are luring physical buyers across Asia, with premiums for gold bars in Singapore hitting a record high.
"Without the pressure of the dollar strength and firmer equities, gold is rising today on strong Asian physical demand," said David Meger, director of metals trading at Vision Financial Markets.
"Pretty much any dips have been met in adequate buying," Meger said.
Spot gold was up 0.9 percent at $1,391.30 an ounce by 2:24 p.m. EDT (1824 GMT), after falling in the previous session as equity markets rose on strong US home sales and consumer confidence data.
Trading volume was around 25 percent above its 30-day average, preliminary Reuters data showed, driven by June-August contract rollover ahead of June's first-notice day on Friday.
US stocks retreated from record levels on concerns that the Fed may start to ease up on its stimulus program.
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