Gold recovered from early losses on Monday after Hong Kong pro-democracy supporters clashed with police, keeping Asian stocks on edge and boosting bullion's appeal as a safe haven, though the strength in the dollar kept the metal's gains in check.
Hong Kong democracy protesters defied volleys of tear gas and police baton charges to stand firm in the centre of the global financial hub in the worst unrest there since China took back control of the former British colony two decades ago. Gold, seen as an alternative investment during times of political instability, got a boost as Hong Kong shares sank more than 2 percent, while Asian stocks tumbled to a four-month low.
Some bullion dealers, however, were worried that retail sales in Hong Kong, a hot spot for tourists from mainland China, could take a hit because of the protests, especially during the one-week National Day holiday that begins on Wednesday. "Yes, there will definitely be some impact on gold retail sales," said Dick Poon, general manager of refiner and dealer Heraeus Metals in Hong Kong. China is the biggest buyer of gold, and any drop in consumer demand there could fail to support any rally in prices. Spot gold was steady at $1,218.76 an ounce by 0642 GMT, after falling as much as 0.3 percent earlier in the day.