Gold barely moved on Wednesday as rising equities and hopes for further economic recovery in the United States prompted some investors to shift to riskier assets, but lower prices could spur bargain hunting from jewellers.
The safe-haven appeal of gold was also dented by easing tensions in Egypt after President Hosni Mubarak said he would surrender power in September, offering a mixture of concessions and defiance to Egyptians who marched a million strong to demand his 30-year-rule end immediately.
Investors awaited the release of the ADP Employer Services report at 1315 GMT, which could be supportive for U.S. stocks and the dollar if the numbers were better than expected. Most recent U.S. indicators have suggested the economy is picking up steam. Spot gold hit a low around $1,337 an ounce before steadying at $1,340.70 by 0243 GMT -- well below a lifetime high around $1,430 struck in December. Trading slowed to a trickle in Asia ahead of the Lunar New Year celebration.
"If we see employment and job creations start to pick up, it will add on to the prevailing sense of economic optimism in the market," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
"So gold could come under some pressure as investors move into other risk assets like equities and industrial metals. I thiFnk I will look at first support for gold at about $1,325 and the next level will be about $1,300."
The Nikkei was on track for its biggest daily jump in two and a half months on Wednesday after global markets rallied on strong manufacturing data, robust U.S. earnings and easing concerns about the Middle East.
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