Gold barely moved today as rising equities and hopes for further economic recovery in the United States prompted some investors to shift to riskier assets, but lower prices could spur bargain hunting from jewellers.
The safe-haven appeal of gold was also dented by easing tensions in Egypt after President Hosni Mubarak said he would surrender power in September, offering a mixture of concessions and defiance to Egyptians who marched a million strong to demand his 30-year-rule end immediately.
Investors awaited the release of the ADP Employer Services report, which could be supportive for US stocks and the dollar if the numbers were better than expected. Most recent US indicators have suggested the economy is picking up steam.
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Spot gold hit a low around $US1337 an ounce before steadying at $US1340.70 - well below a lifetime high around $US1430 struck in December. Trading slowed to a trickle in Asia ahead of the Lunar New Year celebration.
"If we see employment and job creations start to pick up, it will add on to the prevailing sense of economic optimism in the market," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
"So gold could come under some pressure as investors move into other risk assets like equities and industrial metals. I think I will look at first support for gold at about $1325 and the next level will be about $US1300."
The Nikkei was on track for its biggest daily jump in two and a half months on Wednesday after global markets rallied on strong manufacturing data, robust US earnings and easing concerns about the Middle East.
ADP Employer Services report later in the day is expected to show US private employers added 145,000 jobs in January.
Forecasts from economists polled by Reuters range from 75,000 to 250,000.
US gold futures for April added $US1.7 to 1,342 an ounce, having settled around $US5 higher on weaker US dollar.
Spot gold may resume its downtrend this week and fall to $US1290-$US1280, as it is unable to break above an upper channel line resistance at $US1,346, according to Wang Tao, who is a Reuters market analyst for commodities and energy technicals.
In the physical market, dealers noted buying interest from several buyers in Asia, keeping premiums for gold bars steady at their highest levels in at least seven years in Singapore and Hong Kong.
"Things have slowed down but we receive orders from clients from Thailand and India. Premium remains at $1.90 at my end," said a dealer in Singapore.
Gold imports in India, the world's largest consumer of the precious metal, rose 18 per cent in January to 40 tonnes provisionally, and next month's wedding season could further boost demand, head of a trade body said.
In India, which accounts for 20 per cent of global demand for jewellery, gold is widely given in religious celebrations and weddings.
The euro rose to its highest level in nearly three months, extending gains on rising investor risk appetite. The euro rose to $US1.3853 , its highest level since early November.
