Gold eased as traders awaited data on jobs, consumer sentiment and durable goods orders later on Wednesday for clues on the outlook for US monetary policy, but moves were muted as physical demand lent support. Recent strong US data has fuelled talk that the Federal Reserve could soon raise interest rates. The US government upgraded its reading on third quarter gross domestic product to 3.9 percent on Tuesday.
Divergence between Fed monetary policy and that of other central banks is seen as lifting the dollar, while higher interest rates raise the opportunity cost of holding non-yielding bullion. Spot gold was down 0.4 percent at $1,195.30 an ounce at 1311 GMT, while US gold futures for December delivery were down $2.50 an ounce at $1,194.60.
"At the moment we have a stand-off situation," LBBW analyst Thorsten Proettel said. "On the one side, we have the prospect of higher interest rates in the United States, which is not a situation in which the gold price can move higher. On the other, we're seeing some greater demand for gold from Asia." China's net gold imports from main conduit Hong Kong hit a seven-month high in October, according to official Hong Kong data released on Tuesday.
Gold saw some buying interest in Asia overnight, MKS said in a note, though that was not enough to push prices much higher. "Some decent volume went through the Shanghai Gold Exchange today, mainly on the buy side, which helped shift the premium out to $1.00-$2.00," it said. Gold has seen quiet trading since recovering from a four-and-a-half year low earlier this month. Speculation that Switzerland could vote in favour of a motion to raise its gold reserves has underpinned prices.
The vote is aimed at preventing the Swiss National Bank from offloading its gold holdings and obliging it to hold at least 20 percent of its assets in gold, compared with 8 percent last month. Silver was down 0.5 percent at $16.56 an ounce, while platinum was up 0.3 percent at $1,219.98 an ounce and palladium was up 1.5 percent at $800 an ounce.