Gold held below $1,600 an ounce on Tuesday as a slightly brighter than expected reading of euro zone manufacturing activity lifted stock markets, diverting interest from bullion.
Investors were reluctant to build significant positions ahead of Bank of Japan and European Central Bank policy meetings on Thursday and U.S. payroll numbers on Friday, however.
Spot gold hit an intraday high of $1,603.60 an ounce in the first session after the Easter break, but it was unable to hold on to gains and dipped to $1,596.81 by 1151 GMT, down 0.1 percent on the day.
The metal snapped three weeks of gains last week to fall 0.7 percent, but managed to post a 1.1 percent rise in March. It fell 4.6 percent in the first quarter.
U.S. gold futures for June delivery were down 0.2 percent at $1,597.80 an ounce.
“Gold has not really found the catalyst to take it out of the range we have seen for few weeks, and weaker data haven’t made much impact as key macro events are still to come later in the week,” Saxo Bank senior manager Ole Hansen said.
“Going forward into the second quarter, there seems to be a much better balance for gold to react to economic data after speculative positions have been much reduced and exchange-traded products saw record outflows.”
Liquidity was slowly returning as most financial markets in Europe, including London, returned from the Easter holiday.
European shares extended their gains after slightly better than feared euro zone manufacturing data, rising about one percent.
Markit’s Eurozone Manufacturing Purchasing Managers’ Index fell in March to 46.8 from 47.9 in February, slightly better than a preliminary estimate of 46.6, with the Cyprus bailout crisis yet to take a toll on the euro zone’s factory activity.
The dollar and Asian shares struggled overnight after data showed U.S. factory activity grew at the slowest rate in three months in March, indicating the economy lost some momentum at the end of the first quarter.
The euro fell against the dollar, also kept on the back foot by worries about the political deadlock in Italy and the bailout crisis in Cyprus.
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