Gold inched higher on Tuesday as the dollar slipped, but the precious metal struggled to stabilise even after weeks of losses.
Spot gold was 0.2 percent firmer at $1,226.31 an ounce while US gold futures for August delivery rose 0.1 percent to $1,226.50 an ounce.
The dollar index, which measures the currency against a basket of six major currencies, fell 0.2 percent after touching a one-year high last week.
Gold has shed more than 10 percent since touching a peak of $1,365.23 in mid-April, largely due to stronger dollar impact amid US interest rate hikes. Last week it hit a one-year low.
“Gold is likely to see a sideways trend in coming weeks, trying to find a bottom,” said Carsten Fritsch, commodity analyst at Commerzbank in Frankfurt.
“It’s too early to say that gold has bottomed out, but there are some tentative signs pointing in that direction. This process could take weeks if not months to recover from the losses and the damaged technical picture,” he said.
Gold has technically broken below the 200-day moving average on a weekly basis, according to Fritsch, who said one positive sign was that holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.6 percent to 802.55 tonnes on Monday, its highest in over two weeks.
Gold could experience volatility with sharp, brief moves higher on short-covering since speculative short positions were at near record high levels, Fritsch said.
The precious metal prices, which usually gain in times of political and financial instability, have failed to do so, analysts have noted, with investors’ reaction to the dispute between the US and Iran staying muted.
Iran on Monday dismissed an angry warning from US President Donald Trump that Tehran risked dire consequences if it made threats against the US.
“In addition to the dollar, there has been little follow-through on the Trump and Rouhani war of words and, frankly, the overall reaction on risk sentiment was muted,” said Stephen Innes, Asia-Pacific trading head at Oanda.
In other precious metals, which have industrial applications, got a boost from higher base metal prices. Silver rose 0.8 percent to $15.48 per ounce, platinum gained 0.8 percent to $837.20 per and palladium added 0.4 percent to $917.25.