(Reuters) - On Thursday, gold lost early gains to drop more than half a percent, hit by the stronger dollar and positive economic data hurt its safe-haven appeal.
Strong U.S. auto sales records moreover strengthened prospects of the U.S. Federal Reserve would begin to taper its stimulus later this month. The central bank’s three quantitative easing structures have held up prices for bullion, which is frequently accepted as a hedge against inflation.
Gold hit an intraday high at $1,394.61 an ounce, ahead of falling to $1,385.50 by 0644 GMT, down by $5.34 on the day.
It moved to its highest in more than three months about $1,433 in late August on safe-having buying as the U.S. and its allies looks closely to take a military action against Syria.
Joyce Liu, an investment analyst at Phillip Futures in Singapore said “If we break through the critical support level of $1,380, prices will go all the way down to at least $1,353. For now, they are many issues surrounding gold which are offsetting each other,”
U.S. gold dropped $4.30 an ounce to $1,385.70.
The London A.M. fix is $1,391.75.
In India gold consumers began to restart imports on Wednesday, where the customs department cleared up new rules, positioning the world’s largest consumer back in the market after a six-week drop-out and intimidating government struggles to strengthen the rupee.
A dealer in Hong Kong said “The thing is that the import tax is still high in India, so I think that is dampening their buying interest. Also gold prices are still high at close to $1,400,”.
New Delhi has increased the import duty on gold to a record high of 10%.
Premiums for gold bars in Hong Kong declined to $2 an ounce to spot London prices from $2.50 in late August. In Singapore, some dealers presented gold bars at premiums of $1 an ounce, decreased from $1.50 last week due to sales from Thailand and Indonesia.