SINGAPORE: Gold fell 1 percent on Tuesday, slipping into negative territory after some early bargain hunting, while daily outflows from exchange-traded funds highlighted investors' lack of confidence in the precious metal.
Although gold's appeal as a hedge against inflation may be burnished by hopes the US Federal Reserve will maintain its bond-buying programme, surging stock markets could tempt investors to ditch bullion and shift to equities.
Gold fell $14.18 an ounce to $1,461.61 by 0617 GMT.
It had gained slightly on Monday on expectations the Fed would keep the pace of its bond buying unchanged at $85 billion a month following weaker-than-expected US growth.
"From a technical point of view, although the rebound has been relatively solid, it appears to be a more sustained correction of the fall that we saw from late March, rather than a turn in trend," said Tim Riddell, head of ANZ Global Markets Research, Asia.
"Really what we need to see is a series of closes above $1,505 to take the pressure off," he said, adding that a drop below $1,435 could trigger a favoured technical pullback to $1,300 and potentially even as deep as $1,245.
US gold for June delivery gave up early gains and stood at $1,461.10, down $6.30.
Cash and US gold futures sank to around $1,321 on April 16, their lowest in more than two years, after a drop below $1,500 led to a sell-off which stunned investors, and prompted them to slash holdings of exchange-traded funds.
Asian shares edged higher on Tuesday, a day after the S&P 500 index ended at an all-time high and as investor risk appetite was bolstered by expectations the US Federal Reserve and the European Central Bank will continue with growth-supportive monetary stimulus measures.
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