Gold extended losses for a fourth straight day on Tuesday as outflows from physical gold funds pointed to weak investment appetite, though a retreat in the dollar took some pressure off prices.
The metal hit its lowest since early April at $1,281.40 an ounce on Monday, after peaking above $1,330 a week before on concerns over Ukraine. Though East-West tensions remain high, gold is no longer benefiting.
"Traders seem to have given up on gold as a provider of safe haven at the moment," Saxo Bank's head of commodity research Ole Hansen said. "Instead the focus remain firmly on the United States, where earnings and economic data continue to indicate interest rates will rise sooner rather than later.
"Hedge funds cut their net-long position back to February levels and total ETP holdings have dropped to a new 2009 low. So with the U.S. healing, Chinese demand questionable and investment demand not showing signs of picking up, gold is back on the defensive."
The dollar was unchanged against a basket of currencies in early trade, surrendering gains that earlier took it to a three-week high. Since gold is priced in dollars, a weaker currency can flatter the gold price.
The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, reported another drop in holdings on Monday, of 3 tonnes to 792.14 tonnes.
Last week alone, outflows from the fund totalled 9.3 tons, erasing all the gains made in the year. Traders said persistent outflows from the top ETF could make any gains hard to hold.
Demand was soft overnight in Asia, precious metals house MKS said in a note on Tuesday, a day after gold's discount to spot prices on the Shanghai Gold Exchange widened to $6 an ounce.
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