Singapore - Gold struggled to stay above the key $1 400 an ounce level and slipped on Tuesday as traders took profits after a recent price rally, though it remained near 11-week highs on hopes of US monetary stimulus measures being prolonged.
Gold rose to $1 406.04, its highest since June 7 in early Asian trading, but failed to find enough support to stay at those levels. Weak US durable goods data had pushed gold past $1 400 on Monday.
"It's quite risky to build on any fresh positions from here so people are just taking profits," said one Hong Kong-based trader.
"If we cannot hold and stay above $1 400 by the end of the week, it's a very bearish situation for gold technically."
Spot gold dropped 0.4% to $1,398.21 an ounce by 04:22 GMT, while silver slipped 0.7%.
Gold has gained nearly 6% this month and almost 20% from its year-low of $1 180.71 hit in late June.
Recent US data on industrial production, new home sales and durable goods orders have suggested economic growth this quarter will probably not accelerate as much as economists had hoped.
Traders believe the weak data could delay the Federal Reserve from tapering its stimulus that economists had largely expected to start from next month. The Fed's $85bn a month bond purchases have helped drive increased liquidity towards gold and other commodities.
Physical demand weak
Dealers said physical demand in Asia remained subdued due to a seasonally weak summer period and the recent jump in prices.
India is considering asking gold traders to produce proof of payment for their jewellery exports, trade body officials said on Monday, a move which may further tighten supplies in the world's top bullion buyer.
Imports have come to standstill since July 22 when the Indian central bank issued a rule tying imports to exports, in an effort to reduce its trade deficit.
Premiums of Shanghai gold futures to London prices have fallen to about $18 an ounce from last week's above $20 levels.
Gold rose to $1 406.04, its highest since June 7 in early Asian trading, but failed to find enough support to stay at those levels. Weak US durable goods data had pushed gold past $1 400 on Monday.
"It's quite risky to build on any fresh positions from here so people are just taking profits," said one Hong Kong-based trader.
"If we cannot hold and stay above $1 400 by the end of the week, it's a very bearish situation for gold technically."
Spot gold dropped 0.4% to $1,398.21 an ounce by 04:22 GMT, while silver slipped 0.7%.
Gold has gained nearly 6% this month and almost 20% from its year-low of $1 180.71 hit in late June.
Recent US data on industrial production, new home sales and durable goods orders have suggested economic growth this quarter will probably not accelerate as much as economists had hoped.
Traders believe the weak data could delay the Federal Reserve from tapering its stimulus that economists had largely expected to start from next month. The Fed's $85bn a month bond purchases have helped drive increased liquidity towards gold and other commodities.
Physical demand weak
Dealers said physical demand in Asia remained subdued due to a seasonally weak summer period and the recent jump in prices.
India is considering asking gold traders to produce proof of payment for their jewellery exports, trade body officials said on Monday, a move which may further tighten supplies in the world's top bullion buyer.
Imports have come to standstill since July 22 when the Indian central bank issued a rule tying imports to exports, in an effort to reduce its trade deficit.
Premiums of Shanghai gold futures to London prices have fallen to about $18 an ounce from last week's above $20 levels.