Gold inches up on weaker dollar; Spain worry weighs
Gold edged up on Tuesday, aided by a slightly weaker dollar, but concerns about Spain's high borrowing costs and its struggling banking sector kept gains in check.
Bullion has fallen more than 5 percent so far this month, on course for its biggest monthly decline since December, as fear of Greece's exit from the euro zone as well as Spain's crisis sank the euro and boosted the dollar index to a 20-month high, weighing on gold priced in the greenback.
The impact of a strong dollar more than offset gold's safe-haven appeal, especially as the prospect of further monetary easing by the U.S. central bank in the near term has dimmed.
''If Spain ended up seeking an international bailout, it would trigger more panic than Greece,'' said Li Ning, an analyst at Shanghai CIFCO Futures.
''Such concern is reflected in the enormous pressure at the $1,600 level, as the dollar index appears to retain an uptrend.''
Gold has attempted to breach that resistance level a few times over the past week or so without success, which could in turn send prices lower, Li cautioned.
U.S. gold rose nearly half a percent to $1,576.50.
As a sign of persistent worries about Spain's finances, the country's 10-year borrowing costs rose to near the dangerous 7-percent level, and the risk premium on Spanish government debt over German Bund hit a euro-era high, as investors sought refuge in assets perceived to be low-risk.