Gold gained more than $1 an ounce in Asia on Wednesday, with the help of physical demand, ahead of key US data that will help set direction for the dollar. Spot gold was at $388.15/388.65 an ounce, versus $386.80/387.30 last quoted in New York on Tuesday, when it dropped more than $3 in reaction to better-than-expected US consumer confidence data.
Dealers are waiting for US durable goods data on Wednesday and gross domestic product figures on Friday to get fresh idea about the course of the US economic recovery and the likely pace of interest rate rises.
"Everything is based on the dollar," said Ronald Lunge, director of Lee Cheong Gold Dealers in Hong Kong, a key bullion-trading city in Asia. There was a light physical buying in Hong Kong, said Lung.
Gold has tracked movements of the dollar against other currencies, especially the euro. A firmer dollar will make dollar-priced gold more expensive for holders of other currencies, reducing its safe-haven appeal.
The Conference Board's index of US consumer confidence rose to 106.1 in July. It beat forecasts and triggered resumption of a rally in the dollar, which began last week after upbeat comments on the US economy from Federal Reserve Chairman Alan Greenspan.
The euro was at $1.2069, not far from the five-week low of $1.2035 hit in New York.
"We've also seen some demand here. It keeps the market going," said Beh Hsia Wah, a dealer at United Overseas Bank in Singapore, a centre for bullion trading in Southeast Asia. "I think (price) might come down a little.
But hopefully there's buying interest that can support the market a little bit," she said. In Tokyo, the benchmark June 2005 gold contract rose two yen per gram to 1,387 yen per gram.
Silver was $6.19/6.21 an ounce, compared with $6.22/6.24 in New York.
Platinum fell to $797/802 an ounce, versus $804.50/809.50 in the US market. Sister metal palladium was at $217/222 an ounce, unchanged from US last quoted levels.