Gold fell on Tuesday as the dollar rose, but concerns that rising energy prices could dampen economic activity dented appetite for riskier assets and kept bullion close to a more than one-week peak hit in the previous session.
Spot gold fell 0.4% to $1,761.69 per ounce by 0254 GMT, after hitting $1,770.41 on Monday, its highest since Sept. 23. U.S. gold futures were 0.3% lower at $1,762.30.
The dollar index rose, making gold more expensive for those holding other currencies, while equity markets slid on concerns about rising inflation.
Subdued shares are prompting some Asian investors to buy the dollar, pressuring gold, said Jeffrey Halley, senior market analyst for Asia-Pacific at OANDA, adding, gold would be in a choppy $1,750-$1,785.00 range ahead of the U.S. non-farm payrolls data on Friday.
Other risks include fragile U.S.-China trade ties, China Evergrande crisis and a stalemate over the U.S. debt ceiling. urn:newsml:reuters.com:*:nL1N2R016K
"Gold could find support on dips to $1,750.00 this week, as inflation and U.S. fiscal fears increase," but while the uncertainties will support gold to an extent, "the U.S. monetary policy direction will be the winner in the end," Halley added.
The nonfarm payrolls is expected to show continued improvement in the labour market, likely enough to keep the U.S. Federal Reserve on course to begin tapering stimulus before year-end.
Reduced stimulus and interest rate hikes lift bond yields, weighing on gold as it translates into increased opportunity cost of holding non-interest-bearing bullion. US/
"The looming Fed tapering should produce some headwinds for gold going into October, but we think the precious metal should be able to withstand the announcement. Arguably, the market has discounted much of this already," ED&F Man Capital Markets analyst Edward Meir said in a note.
Spot silver fell 0.8% to $22.47 per ounce, platinum XPT= shed 0.6% to $960.89, while palladium was little changed at $1,905.18.
(Reporting by Swati Verma and Arpan Varghese in Bengaluru; Editing by Subhranshu Sahu and Rashmi Aich) ((firstname.lastname@example.org;))