By Sethuraman N R
REUTERS - Gold prices fell on Thursday as a rally in U.S. equities offset support from uncertainty over the new U.S. administration's policies and a weaker dollar.
Spot gold prices were down 0.34 percent at $1,196.12 per ounce at 0745 GMT. On Wednesday, they hit their lowest since Jan. 13 at $1,192.74.
U.S. gold futures fell 0.1 percent to $1,195.80.
"The bullish impact of a weaker dollar was more than offset by a soaring U.S. equity market where we saw the Dow take out the 20,000 mark for the first time," said INTL FCStone analyst Edward Meir.
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"We suspect that gold could come under further pressure again on Thursday as the follow-through from the U.S. stock rally reverberates through into other global markets," he added.
The Dow closed atop the 20,000-mark for the first time overnight, boosted by solid earnings. [.N]
Asian stocks gained on Thursday, lead by the Wall Street rally. [MKTS/GLOB]
However, the currency markets focused more on Trump's trade protectionism and the negative impact it could have on the dollar. [USD/]
The dollar index, which measures the greenback against a basket of currencies, held near 7-week lows.
"Market will likely remain under pressure with the Chinese out for the next week," MKS PAMP Group trader Jason Cerisola said.
Gold hit two-month highs earlier in the week and has rallied about 7 percent since mid-December, fuelled by worries over Trump's policies.
However, physical gold demand in India was weak due to higher prices, while Chinese demand ebbed ahead of the Lunar New Year holiday, traders said.
"The market is due for some correction after the rally ... see it as purely a technical one. Lack of Chinese participants too is hurting," a Singapore-based trader said.
Spot gold may retest support at $1,197 per ounce, with a good chance of breaking below this level and falling towards the next support at $1,182, according to Reuters technical analyst Wang Tao. [nL4N1FG1BJ]
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.63 percent to 799.07 tonnes on Wednesday from 804.11 tonnes on Tuesday. [GOL/ETF]
Spot silver fell 0.5 percent to $16.88.
Platinum was firm at $978.50. Palladium rose 1.3 percent to $736.98, after hitting a 3-week low of $726.98. It fell over 7 percent in the previous session, its worst one-day fall since April 2013.
"We have to suspect that heavy fund selling was a factor," said Meir of FCStone.
"The market may also be getting nervous about the increasing trade tensions between the U.S. and Mexico where a substantial amount of car production could be jeopardized by an increase in duties that will inevitably be passed on to consumers."
(Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph Radford and Randy Fabi)
Disclaimer: No Business Standard Journalist was involved in creation of this content
