Spot gold edged up on Tuesday, supported by a weakening dollar and bullish technical views, but the yellow metal looked capped at $900 per ounce a day after failing to break above that level. Investors were watching stock market moves to gauge risk appetite as markets reopened after the Easter holiday. Spot gold was trading at $895.70 per ounce, up 0.4 percent from New York's notional close of $892.05 on Monday, when it rose as high as $899.35.
But he said bullion could test $900 again after European participants come back from the long holiday weekend, given solid support at $880 per ounce and the weakness in the dollar, amid a growing number of bright spots in the global economy.
On Tuesday, increasing risk appetite helped drive the dollar and yen down while the euro and the Australian and New Zealand dollars rose, with optimism about China's recovery prospects helping the commodity currencies. Gold's downside has been supported by seasonal demand from India, the world's largest consumer, which is preparing for the Akshaya Tritiya festival on April 27, when Hindus, particularly in the south, buy gold to invoke prosperity.
Lower gold prices spurred buying in India ahead of the festive season, although low volumes suggested some consumers were waiting for further price declines. But further gains in stock markets could put a weight on gold, traders said.