(March 29): Gold inched down on Wednesday in the face of a key technical resistance and talks on further rate hikes this year saw the US dollar move away from multi-month lows amid rising equities.
"A resurgent US dollar, along with higher US yields and equities has taken the momentum out of the gold rally for now," said Jeffrey Halley, senior market analyst at OANDA.
The metal was also under pressure after failing to break through its 200-day moving average at US$1,260, Halley said, posting its second consecutive down day in Asia.
Spot gold was down 0.1% to US$1,250.75 per ounce at 0714 GMT. US gold futures slipped 0.5% to US$1,249.8.
Reinforcing rate hike expectations, US consumer confidence index hit 125.6 in March, surpassing expectations for a reading of 114 and much higher than 116.1 in February. The March level marked the highest since December 2000.
The US dollar bounced from multi-month lows as a top US Federal Reserve official talked of more rate hikes to come.
Fed Vice Chairman Stanley Fischer, one of the more influential policymakers with markets, said two more rate increases this year seemed "about right".
"Perhaps the expectations of a June rate hike have gone up, given the recent statements from the central bank officials," said Jiang Shu, chief analyst at Shandong Gold Group.
A strong greenback makes US dollar-denominated gold more expensive for holders of other currencies, potentially decreasing demand.
Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, which is considered a gauge of investment demand, reported an outflow of 1.8 tonnes on Tuesday.
Gold prices could continue to be slightly pressured into the next month or so, especially as the market awaits key economic data from the United States for further clarity on US interest rate hikes, Shu said.
Gold bullion investment will rise for the fourth straight year in 2017 as global political and economic factors are forecast to maintain buying interest, CPM Group said on Tuesday.
"As for the balance of this week, we think that gold will stabilize and possibly push higher given that Tuesday's advance in equities did not have much of an impact in slowing its upward momentum," INTL FCStone analyst Edward Meir said in a note.
"In addition, technicals still look constructive, just as physical demand seems to be improving, particularly out of India."
In other precious metals, spot silver slipped as much as 0.4% to US$18.10 per ounce. In the previous session, the metal hit US$18.24, the highest since March 2.
Platinum rose up to 0.6% to US$953 per ounce, while palladium prices were down 0.3% to US$790 an ounce.