Gold prices edged lower in Asia on Wednesday as the dollar took a breather after plunging to multi-month lows, although fading prospects for US monetary tightening this year and political gridlock in Washington continued to pressure the greenback. The dollar stayed on the defensive and remained near over 10-month lows as investors wagered any further tightening in the United States would be slow at best, while optimism on China's economy underpinned Asian shares and commodities.
"We still remain somewhat neutral on gold this year despite a rather good run of late," said Edward Meir, analyst at INTL FCStone. "Still, we are not overly bearish on the precious metal at this stage either, as the backdrop of a falling dollar is too difficult to ignore." Spot gold fell 0.2 percent to $1,240.11 per ounce at 0702 GMT. In the previous session, it hit its highest since June 30 at $1,244.56. US gold futures for August delivery fell 0.2 percent to $1,239.50 per ounce.
Spot gold may rise more to $1,250 per ounce, as it has cleared resistance at $1,239, according to Reuters technical analyst Wang Tao. Meanwhile, holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.68 percent to 821.45 tonnes on Tuesday from 827.07 tonnes on Monday.
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