Singapore: Gold held overnight gains to trade near its highest in a week on Wednesday, supported by weakness in the dollar and equities, but fund liquidation and uncertainty over the timing of a possible U.S. rate hike kept the rally in check.
FUNDAMENTALS
* Spot gold was steady at $1,192.90 an ounce by 0029 GMT, not too far from a one-week high of USD 1,196.60 reached on Tuesday.
* The metal`s near-1-percent gain in the previous session was triggered by safe-haven bids as the dollar fell and stocks took a hit from volatility in global bond markets.
* German bond yields climbed on Tuesday on optimism that inflation may have bottomed in the euro zone, lifting demand for the euro. U.S. 10-year Treasury yields hit six-month highs before steadying.
* The dollar was also on the defensive in case U.S. retail sales due later in the day disappoint.
* Financial markets are closely watching U.S. data to gauge the strength of the economy and how that would impact the Federal Reserve`s interest rate policy.
* Strong data could prompt an early rate hike, boosting the greenback and hurting non-interest-yielding gold.
* There was no clarity on when the U.S. central bank would make such a move.
* The Fed`s ability to delay its initial interest rate hike to head off economic shocks is now "more limited" than its ability to quickly tighten monetary policy in response to positive surprises, a top Fed policymaker said on Tuesday.
* Another top Fed official said he does not know when interest rates will rise, but he tempered that uncertainty by applauding an apparent consensus between markets and the U.S. central bank that it will happen later this year.
* Gold has also been hit by outflows from bullion exchange-traded funds. SPDR Gold Trust, the top gold-backed exchange-traded fund, saw the sharpest one-day decline in holdings this year on Friday of nearly 11 tonnes.
* Further significant outflows from the fund could undermine any price rally, or even send gold lower.
