SINGAPORE: Spot gold edged down on Tuesday, under the weight of a stronger dollar as a short squeeze boosted the greenback, and a weak technical picture cast a shadow on gold's short-term outlook.
The dollar was bought back broadly on a flurry of stop-loss buying and short-covering by macro funds, while the euro was set to snap a six-day winning streak.
A stronger greenback makes dollar-denominated gold more expensive for buyers who hold other currencies.
The technical picture suggested a lack of momentum in bullion, although physical buying by Asian countries, including Thailand and Indonesia, helped support prices.
Spot gold inched down 0.1 percent to $1,493.70 an ounce by 0617 GMT.
"We have seen a lot of interest below $1,500, but it is not enough to bring prices back above the level," said Dominic Schnider, an analyst at UBS Wealth Management.
Schnider said that gold's short-term technical picture looked sluggish after prices broke an uptrend from 2008.
"A lot of people have cleared positions after the uptrend was broken and we are still in a consolidation phase. Gold could move towards $1,445 from a technical perspective," he said.
In the short term, gold's technical signals were seen neutral after prices failed to drop in the previous session, and prices were expected to range between $1,479 and $1,514, said Reuters market analyst Wang Tao.
Since June 27, spot gold has traded in a range of $1,478.01 to $1,513.71 an ounce.
THAIS BUY ON STRONG BAHT
The lower prices have attracted buying on the physical market from Thailand and Indonesia, dealers in Singapore and Hong Kong said.
"The election strengthened the baht, encouraging the purchase of gold from jewelers and bullion traders alike in Thailand," said a dealer based in Singapore.
The Thai currency rose more than 1 percent against the dollar on Monday as Sunday's general election eased worries about the country's political uncertainty.
In Indonesia, jewellers are stocking up gold ahead of the Ramadan which falls in August this year, during which consumers traditionally purchase gold jewellery.
Interest from India, the world's top gold consumer, remained muted as the country goes through the monsoon season when farmers are busy sowing and gold sales is slow.
Investors are eyeing a spate of data out of the United States later this week, including the key non-farm payrolls data to gauge the health of the world's largest economy.
Copyright Reuters, 2011
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