Gold prices hovered near multi-week lows on Thursday as higher U.S. bond yields and a stronger dollar dampened interest in bullion.
Worries about growing supply of U.S. government debt and inflationary pressures from rising oil prices have pushed U.S. 10-year bond yields above 3 percent for the first time in four years.
That, in turn, has helped to thrust the dollar to its strongest since January, making bullion more expensive for users of other currencies. Higher bond yields, meanwhile, also reduce the attraction of non-yielding gold.
"At these low (price) levels, the market could now attract some physical buying interest," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. "The market has a very good (physical) support at around $1,310-$1,315."
Gold has been stuck in a trading range between about $1,360 and $1,310 since hitting a 1-1/2 year high of $1,366.07 in January. It has been supported by geopolitical uncertainty, which has fueled demand for gold as a safe haven, but has been prevented from moving higher by fears of rising U.S. interest rates that would push up bond yields and strengthen the dollar.
U.S. GDP and inflation data on Friday could give new direction to prices, said Mitsubishi analyst Jonathan Butler.
Stronger than expected economic growth or inflation would hurt gold by bolstering expectations of more rapid increases to interest rates.