LONDON: Gold fell around 1 percent on Tuesday as data indicating economic growth on both sides of the Atlantic dented its appeal as a safe haven, while a steady dollar also weighed prices down.
The figures showed that growth in the US services sector rebounded from a three-year low, while British businesses boomed and activity at euro zone companies expanded, albeit modestly, in July for the first time in 18 months.
Spot gold fell as much as 1.2 percent to $1,287.44 an ounce early in the day and was down 0.8 percent at $1,293.21 by 0945 GMT.
US gold futures for December fell $9.80 to $1,292.60 an ounce.
Losses were exacerbated by technical selling as automatic sale orders were placed by traders below the $1,300 an ounce mark to limit losses, traders said.
"We fell through the psychological support level of $1,300 last night, and it does feel as the prevailing dollar strength is curtailing gold momentum," bullion dealer Sharps Pixley CEO Ross Norman said.
"It is hard to read too much into moves during the summer months as the market can fluctuate widely on very small trades ... I suspect we can \ some more downside from here in the short term."
The dollar was steady against a basket of currencies and European shares were mixed. Benchmark US Treasury yields rose to around 2.65 percent, below July's two-year peak of 2.755 percent but still higher than at the start of the year.
As gold pays no interest, the returns from US bonds are closely watched by market participants.
Gold has lost around 25 percent of its value this year on fears the US Federal Reserve will curb its monetary stimulus on signs of economic recovery.
Dallas Fed President Richard Fisher reiterated on Monday that the stimulus tapering is likely to start sooner rather than later.
"Since (Fisher) has been one of the most vocal critics of the bond purchasing programme, this is to be taken with a pinch of salt," Marex Spectron said in a note. "However it certainly didn't help the cause of the precious metals."
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