• Gold prices fell 1 percent to a 2-1/2-week low on Tuesday, as investors focused on expectations for higher U.S. interest rates, even as U.S. stock markets swung wildly in both directions a day after the Dow and S&P 500 indexes tumbled.
• Spot gold was down 1 percent at $1,326.51 an ounce by 2:41 p.m. EST (1941 GMT), erasing Monday's 0.5 percent gain, having earlier dropped to $1,325.61, its lowest since Jan. 18.
U.S. gold futures for April delivery settled down $7, or 0.5 percent, at $1,329.50 per ounce.
• Strength in the U.S. dollar index weighed on gold prices earlier, when world stock markets extended their sell-off. The greenback later turned flat. A stronger dollar typically makes commodities priced in the greenback more expensive for buyers using other currencies.
• Markets had been anticipating up to four U.S. interest rate hikes this year. However, the economy may not be as strong as forecast, Pehowich said, reducing the need for such aggressive action.
• "Gold is looking at higher interest rates today," said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.
"Long-term, when the Fed looks like it will be more data-dependent and maybe Fed rate hikes would be down to two, gold could benefit," Pehowich added.
• Gold investors, frustrated that their bullish positions were not seeing gains, probably took profits, said Rob Haworth, senior investment strategist for U.S. Bank Wealth Management.
"When we look at the fundamental data, it's really quite positive. We don't think we're seeing a crash (in equities) because of a sell-off. It's quite plausible the market is looking to take their safe havens off the table and enter a risk-on environment," he said.
• $1,327.37 was Friday's post NFP low that is under attack and now exposing $1,324.14 as the January 18th low. On the bid, the yellow metal can hunt down $1350, $1357 and $1366 with RSI's heading towards overbought territory, FX Street noted.
• Key level to watch right now is $1,320, he noted, adding that if prices fall below that, we could see $1,300 back in play.
Kitco’s senior technical analyst Jim Wyckoff described the equities’ recovery as a “dead-cat bounce” and projected further losses in the near term.
• Spot silver dropped 0.9 percent to $16.59 per ounce. Platinum fell 0.5 percent to $984.50 per ounce after hitting a three-week low of $979.74. Palladium shed 2.4 percent to $1,005.30 per ounce after touching $999.22, its lowest since Dec. 8.
Reference: Reuters, FX Street, Kitco
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