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PRECIOUS-Gold steady as dollar, Asian stocks weaken

Published 01/06/2016, 05:24 pm
Updated 01/06/2016, 05:30 pm
© Reuters. PRECIOUS-Gold steady as dollar, Asian stocks weaken
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* Gold posts biggest one-day gain since May 13 on Tuesday

* Dollar steps further back from 2-month highs (Recasts, updates prices)

By Vijaykumar Vedala

BENGALURU, June 1 (Reuters) - Gold held steady, supported by an easing dollar and weaker Asian stocks on Wednesday, a day after it closed higher for the first time in 10 sessions.

Asian stocks were on a weak footing on Wednesday as a slip in crude oil prices dampened investor appetite for riskier assets, while the recently bullish dollar stalled against the euro and yen following a mixed bag of U.S. economic data.

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U.S. consumer spending recorded its biggest increase in more than six years in April as households stepped up purchases of automobiles, although other data showed an ebb in consumer confidence in May. gold XAU= was little changed at $1,215.80 an ounce at 0645 GMT. The precious metal gained 0.8 percent on Tuesday, its biggest single-day percentage gain since May 13.

The safe haven asset has climbed nearly 15 percent so far this year, but has been under pressure after minutes from the U.S. Federal Reserve's April meeting released last month boosted expectations of an imminent rate rise.

Bullion lost about 6 percent in May, its biggest decline in six months.

U.S. gold GCcv1 was nearly flat at $1,218.50.

"The fact that gold did not undergo another sharp selling bout on Tuesday in light of strong U.S. macro data (and an equally strong dollar) tells us that participants may already have discounted a rate rise," INTL FCStone analyst Edward Meir said in a note.

"However, we do not want to buy gold just yet, but would rather wait for a pullback to the $1,180-$1,190 level where we see more credible support."

An increase in U.S. rates would raise the opportunity cost of holding gold, which does not earn interest. It would also bolster the dollar, making gold more expensive for buyers in other currencies.

U.S. non-farm payrolls data for May is due on Friday and a solid reading could heighten expectations for a rate increase this month or as early as July.

"We expect further correction as the numbers should come in favourably for the Fed to move as early as July and so, taking that into consideration, I think we're not done yet in the adjustment process," said Dominic Schnider of UBS Wealth Management in Hong Kong.

Among other precious metals, spot silver XAG= rose 0.3 percent to $16.03 per ounce.

Spot platinum XPT= and spot palladium XPD= fell 0.4 percent each to $973.74 an ounce and $543.97 per ounce, respectively.

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