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Singapore - Gold reversed earlier losses on Tuesday, trading near three-week highs on hopes that physical buyers and investors would return to the market.
The metal is up for a fifth straight day, gaining strength from a weaker dollar and a surprise rise in holdings of gold exchange-traded funds (ETFs).
"The sentiment in gold has definitely improved recently," said Danny Laidler, head of ETF Securities' Australia and New Zealand business.
"The massive redemptions we saw in April have reduced every month. Hopefully the large outflows have stopped."
Spot gold had risen 0.2% to $1 338.16 an ounce by 09:14, not far from a three-week high of $1 343.06. Silver also added to gains from the previous session.
Gold rose nearly 2% the previous day on strong Chinese gold consumption and an inflow to SPDR Gold Trust, the world's biggest gold ETF on Friday.
The fund's holdings on Monday were unchanged.
The top eight gold ETFs tracked by Reuters have recorded outflows of about $26bn so far this year, hurting gold prices. A reversal in the trend would aid a price recovery.
China's gold consumption surged in the first six months of the year as sliding prices of the metal lured buyers, data showed on Monday, reinforcing expectations that the nation will overtake India as the world's top gold consumer this year.
Gold has fallen about 20% this year amid expectations the US Federal Reserve will start to scale back its economic stimulus, which has supported gold's role as a hedge against inflation.
"Gold prices have been supported lately despite continuing talk of the Fed cutting back on stimulus in September. The main reason being the strong physical market in China," said Phillip Futures analyst Joyce Liu.
With key US economic data due this week, the focus could shift back to the timing of any pull-back in the Fed's stimulus.
However, some experts say even if the bank begins tapering this year the impact will be fairly limited.
"The expectations of a (quantitative easing) QE tapering are already priced in," said ETF Securities' Laidler, referring to quantitative easing.
"There will not be a massive downside when the tapering begins."
The metal is up for a fifth straight day, gaining strength from a weaker dollar and a surprise rise in holdings of gold exchange-traded funds (ETFs).
"The sentiment in gold has definitely improved recently," said Danny Laidler, head of ETF Securities' Australia and New Zealand business.
"The massive redemptions we saw in April have reduced every month. Hopefully the large outflows have stopped."
Spot gold had risen 0.2% to $1 338.16 an ounce by 09:14, not far from a three-week high of $1 343.06. Silver also added to gains from the previous session.
Gold rose nearly 2% the previous day on strong Chinese gold consumption and an inflow to SPDR Gold Trust, the world's biggest gold ETF on Friday.
The fund's holdings on Monday were unchanged.
The top eight gold ETFs tracked by Reuters have recorded outflows of about $26bn so far this year, hurting gold prices. A reversal in the trend would aid a price recovery.
China's gold consumption surged in the first six months of the year as sliding prices of the metal lured buyers, data showed on Monday, reinforcing expectations that the nation will overtake India as the world's top gold consumer this year.
Gold has fallen about 20% this year amid expectations the US Federal Reserve will start to scale back its economic stimulus, which has supported gold's role as a hedge against inflation.
"Gold prices have been supported lately despite continuing talk of the Fed cutting back on stimulus in September. The main reason being the strong physical market in China," said Phillip Futures analyst Joyce Liu.
With key US economic data due this week, the focus could shift back to the timing of any pull-back in the Fed's stimulus.
However, some experts say even if the bank begins tapering this year the impact will be fairly limited.
"The expectations of a (quantitative easing) QE tapering are already priced in," said ETF Securities' Laidler, referring to quantitative easing.
"There will not be a massive downside when the tapering begins."
