London: Gold slipped in Europe on Tuesday, surrendering some of the gains that took the metal to a four-week high in the previous session, as the dollar strengthened versus the euro.
The single currency declined broadly, driven by concern over Greece's persistent debt problems, after a report that the country is set to launch a multi-billion dollar bond in the United States this month.
Spot gold was bid at $1,125.10 (Dh4,129.12) at 0924 GMT against $1,129.70 late in New York on Monday, when it rose as high as $1,133.20 an ounce, its firmest since early March.
RBS Global Banking & Markets analyst Daniel Major said while he sees the $1,100 an ounce level providing strong near-term support, in the longer run, the metal may struggle to maintain such prices.
"Longer term, we think we will see further dollar strength, and we are going into a seasonally weaker period for jewellery demand, as well as a period that is likely to be less supportive from the investment sector," he said.
Further interest rate rises, after Australia's decision to lift rates overnight, may also raise the opportunity cost of holding gold, he added. "The risks are to the downside in terms of the gold price," he said.
The euro slipped versus the dollar after the report of Greece's plans to launch a US bond and sell itself as an emerging market, and after it said it wants to amend a recent EU aid deal, which highlighted Athens' ongoing deficit problems.
The dollar was also supported by strong readings from the US services sector and housing market on Monday which, coming on the heels of a solid jobs report late last week, bolstered the view that the US economy is improving.
Strength in the dollar curbs gold's appeal as an alternative asset and makes dollar-priced commodities more expensive.
