Gold slid more than 1 percent on Tuesday as oil prices shed more than $6 a barrel and as the dollar firmed after comments from Federal Reserve chairman Ben Bernanke. Spot gold fell to $914.20/915.20 an ounce at 1505 GMT from $925.15/926.35 an ounce late in New York on Monday. Earlier it touched a session low of $912.50.
The precious metal edged up a touch earlier in the session as the financial markets wilted, spurring buying of the precious metal as an alternative investment.
However, the fact they did not react more to stock market weakness undermined positive sentiment. "I would have expected gold to have done better earlier on, and it failed to," said HSBC analyst James Steel. In fundamental terms, demand for gold is mixed. Strong investor inflows into ETF funds show investor sentiment towards gold remains strong, said Calyon metals analyst Robin Bhar.
London's ETF Securities said on Monday that the amount of gold held to back its physical gold ETF rose 15 percent last week, while gold holdings at New York's SPDR Gold Trust edged up 0.1 percent to 658.99 tonnes on Monday. "(ETFs are) proof that people are diversifying into precious metals and into gold specifically," Bhar said.
However, the jewellery market remains under pressure. James Steel at HSBC said gold imports into India, the world's leading buyer of gold jewellery, slumped 67.6 percent in June to 24 tonnes from 74 tonnes a year before. "We've seen in the last year enough investment demand to more than compensate for the slackness in jewellery (demand)," said Steel.
Among other precious metals, silver dipped to $17.64/17.69 an ounce against $17.79/17.84 late in New York. Spot platinum fell to a new five-week low of $1,948.50 an ounce, before steadying to trade at $1,949.00/2,069.00 from $1,967/1,987 late in New York.
The metal is being pressured by fears over falling demand from carmakers as the US economy falters. Platinum is widely used in autocatalysts. Spot palladium fell to $438.00/446.0 an ounce from $443.00/451.00 an ounce.