London: Gold fell more than 1 per cent to $1,089.75 (Dh4,001.67) an ounce as a price slip below $1,100 sparked technical selling, and amid caution ahead of Federal Reserve chairman Ben Bernanke's congressional testimony later Wednesday.
Prices hit their weakest since February 12 after they broke resistance at $1,100 an ounce, prompting automated selling. Spot gold was at $1,091.30 an ounce at 9.56am, against $1,102.95 late in New York on Tuesday.
Ole Hansen, senior manager at Saxo Bank, said the precious metal was reacting to a retreat in risk appetite, and to unfavourable technical factors.
"We are back below $1,100 an ounce. That's a technical level we managed to bounce from a couple of times last week, we are now through and we have to find support once again. "The [next] level is around the $1,073 area," he said.
US gold futures for April delivery on the Comex division of the New York Mercantile Exchange slipped $4.40 to $1,098.30 an ounce.
The dollar held broad gains Wednesday after weak US consumer confidence data the previous day stung risk appetite. The euro climbed against the US currency in early trade, but struggled to sustain gains.
Currency traders awaited Ben Bernanke's congressional testimony for clues as to the future direction of the foreign exchange markets.
Fate of stimulus
Bernanke's testimony was likely to include debate over financial regulation and questions over the central bank's evolving strategy to remove unprecedented monetary stimulus from the financial system.
"If, as we suspect, he maintains the clear stance to a loose monetary policy, the market will buy dollars on the hoped-for support this will give the economy," said Credit Agricole CIB.
"If he signals that the exit strategy is picking up pace, either the prospect of higher yields will bolster the dollar, or a nervous market, post the consumer confidence figure, will worry about activity and swing toward the dollar."
