SINGAPORE: Gold inched up on Wednesday after dropping for four straight sessions, as the US dollar eased and outflows from exchange-traded funds halted, but firm equities could lure away investors seeking better returns and keep a lid on bullion's gains.
While gold has recovered around 8 percent from a two-year trough hit in April, its safe-haven appeal has been battered by record high US equities, signs of an improving US economy, and fears of a slowdown in demand by top consumer India.
Gold rose 0.19 percent to $1,428.09 an ounce by 0159 GMT. Bullion has slumped more than 14 percent so far this year, after gaining in the past 12 consecutive years as easy monetary policy burnished bullion's appeal as a hedge against inflation.
Holdings at SPDR Gold Trust, the largest gold-backed ETF, were unchanged at 33.8 million ounces on Monday after falling almost daily.
But the holdings were still within sight of their lowest since March 2009 that was hit after funds cut their exposure to bullion, whose historic fall in April took ardent gold investors and bulls by surprise.
"I think what the market is concerned about is ETF outflows," said Dominic Schnider, an analyst at UBS Wealth Management. "I wouldn't be surprised if we touch $1,405 an ounce in a short period of time. I would assume that it would help revive some physical demand," he said.
US gold futures for June was at $1,427.20 an ounce, up $2.70.
Gold prices drew support from a softer dollar, which made commodities priced in the greenback cheaper for holders of other currencies.
But a rally is US stocks to fresh highs on Tuesday curbed investors' interest in gold, while a slowdown in Indian demand for the precious metal also weighed.
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