Gold slips in Europe

Gold slipped on Tuesday, having failed to hurdle $1,400 an ounce, with physical demand overshadowed by hesitancy from bullion-backed fund (ETFs) investors wary of a firmer dollar and rising stock markets. Dealers also noted US 10-year treasury yields above 2 percent and tame inflation expectations as other negative factors for the market as bullion has no interest rate.
Spot gold was down 0.9 percent to $1,382.29 an ounce by 1329 GMT, after gaining more than half a percent on Monday. It rose 2 percent last week - its strongest weekly percentage gain in a month - but is still down around 18 percent for the year. The dollar index was up 0.2 percent, while European stocks traded near recent multi-year highs.
"We see the downtrend resuming. Physical demand might be slightly supportive but we don't see it turning the market around," Societe Generale analyst Robin Bhar said. "Money is coming out of gold because there is no yield while other industrial commodities and equities markets we see doing better," he added. On physical markets bullion was being sold at high premiums compared with spot prices as there is not enough supply to meet the strong demand.
"We are not seeing any signs of slowing down. People are still thinking it is a good price to go in at," said Zane Lim, regional manager of operations at Singapore-based dealer BullionStar. Demand in India, the world's biggest gold market, was however subdued as the peak wedding season cools off, and its central bank takes steps to curb gold purchases.
Gold is still near the two-year low of $1,321.35 hit in mid-April, when prices saw their biggest two day loss in 30 years, with investors opting for higher-yielding equity markets. Last week, bullion posted its biggest weekly gain in a month after the dollar and stocks were hit by factory data from China and the United States suggesting the pace of manufacturing had slowed.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were at their lowest since mid-February 2009, falling 0.24 percent to 1,016.16 tonnes on Friday. The fund held 1,350.50 tonnes of gold at the beginning of 2013. Traders said that the expiry of June COMEX options later in the day may leave the market around current levels and below $1,400, where good sized open interest is pegged. US gold fell 0.5 percent to $1,379.80 an ounce. Silver and palladium were down in line with gold, while platinum was flat.