Gold regained strength on Tuesday as jewelry makers resurfaced after the
price dropped to its weakest in nearly two months, while investors
looked to movements in other markets for further cues.
A drop in Japanese shares also spurred buying from speculators, who are keeping an eye on U.S. corporate earnings and Federal Reserve Chairman Ben Bernanke's comments on the economy on Wednesday. Other precious metals were also firmer.
Spot gold [XAU=X 1182.8 2.45 (+0.21%) ] added $2.80 to $1,183.15 an ounce in Asian trade after falling as low as $1,177.15 on Monday, its lowest since late May.
"We've seen buying on the lower end, which helps push up the market a bit. There's a mixture of purchases from jewelers and other physical buyers," said a dealer in Hong Kong.
"Technically, the market is still a bit bearish but I think we are looking for a rebound after prices dropped below $1,195. Investors are looking for fresh news because the euro zone has stabilized a bit," he added.
U.S. gold futures [GCQ0 1182.4 0.50 (+0.04%) ] for August delivery was steady at $1,182.3.
Cash gold and U.S. futures struck record highs in late June on worries the debt crisis in Europe would spread and the U.S. economy was slowing.
Japan's Nikkei average fell 1.7 percent on Tuesday as tech shares were hit by disappointment over U.S. corporate results. On Monday, the Wall Street had gained as investors hoped results from key companies Texas Instruments [TXN.N Unavailable () ] and IBM [IBM.N Loading... () ] would echo Intel's positive results last week.
However, TI and IBM shares fell after the bell on disappointing revenue.
Ong Yi Ling, investment analyst at Phillip Futures in Hong Kong, noted that most companies had been reporting earnings for the upside, which should continue to reduce the safe-haven demand for gold.
"And of course, we have the bank stress test at the end of this week, so I think that would also be something that people would definitely monitor," she added.
Europe is assessing how 91 banks across 20 countries would cope with another economic downturn in an effort to restore confidence after Greece's sovereign debt crisis hit markets and sparked fears the euro zone could unravel.
The Committee of European Banking Supervisors (CEBS), which is overseeing the stress tests, said results would be released on an aggregated and bank-by-bank basis from 1600 GMT on Friday.
The euro was steady on Tuesday, hovering within striking distance of two-month highs against the U.S. dollar which was under pressure as investors continued to cut long positions on more disappointing U.S. economic data.
U.S. home-builder sentiment fell more-than-expected in July to the lowest level in more than a year after a popular home-buyer tax credit expired in April, the National Association of Home Builders said on Monday.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust [GLD 115.73 -0.94 (-0.81%) ], said holdings were unchanged at 1,314.211 tones. The holdings hit a record 1,320.436 tones in late June.