Gold prices steadied on Tuesday after well-received US manufacturing data lifted the dollar and boosted appetite for higher-risk assets at gold's expense, balancing support lent by political upheaval in Egypt. Spot gold was bid at $1,331.95 an ounce at 1612 GMT, against $1,331.90 late in New York on Monday. US gold futures for April delivery fell $1.80 an ounce to $1,332.70.
The precious metal rose as high as $1,341.18 an ounce in earlier trade as concerns over unrest in Egypt lifted interest in the metal as a haven, but later surrendered gains, falling as low as $1,325.30 after positive US manufacturing data. "In general the market wouldn't like to be short because it is afraid of the geopolitical risks we are seeing at the moment," said Deutsche Bank senior trader Michael Blumenroth.
Gold in January posted its biggest monthly drop since December 2009 as investor risk appetite improved, diverting interest from so-called havens such as gold into higher-yielding assets. The largest gold exchange-traded fund, the SPDR Gold Trust, saw its second-largest monthly outflow ever in January. The iShares Silver Trust, the main silver ETF, said its holdings fell by the most ever in a single month.
Asian physical gold demand lent some support to gold prices, although this is tailing off as China's Lunar New Year holiday celebrations get underway. Premiums for gold bars soared to their highest in more than two years in Tokyo on Tuesday and could rise further as steady shipments to other bullion trading centres in Asia led to a tight supply, dealers said on Tuesday. Platinum was at $1,812.74 an ounce against $1,791.50, while palladium was at $818.72 against $811.97. Silver was bid at $28.24 an ounce against $28.04.