Gold stays subdued as dollar hovers near four-month peak

By Apeksha Nair

BENGALURU (Reuters) - Gold prices remained subdued on Tuesday as the dollar held steady near its 2018 high on the relative strength of the U.S. economy.

Spot gold was down 0.1 percent at $1,312.66 per ounce as of 0343 GMT, after closing marginally lower in the previous session.

U.S. gold futures for June delivery were about 0.1 percent lower at $1,313.40 per ounce.

The dollar index hovered near its highest level in more than four months, backed by rising Treasury yields and broadly strong U.S. economic data, leaving its major rivals such as the euro struggling.

"The dollar is firming here in Asia which is dampening sentiment on gold," a Hong Kong-based trader said.

A stronger dollar makes gold and other greenback-denominated commodities more expensive for holders of other currencies.

"There's nothing really supporting gold here until we get to some important levels. I think the Iran deal is probably something that could turn things around. Oil might spike and gold could go with it," said the trader.

Oil prices retreated from 3-1/2-year highs on Tuesday as investors waited for an announcement by U.S. President Donald Trump on whether the United States will reimpose sanctions on Iran. [O/R]

As benchmark oil prices touched $70 a barrel, U.S. Federal Reserve officials said on Monday that rising inflation and wage pressures are not enough yet to prompt a change in the central bank's rate outlook.

The market is awaiting Trump's decision on Iran and the U.S. Consumer Price Index (CPI) data for a move in gold prices, the trader said, adding that the Producer Price Index (PPI) numbers coming out this week might be something to look at to see "if there's more hawkishness going down to the end of the year."

Spot gold may revisit its May 1 low of $1,301.51 per ounce as it failed twice to break a resistance at $1,317, Reuters technical analyst Wang Tao said.

Meanwhile, silver gained 0.2 percent to $16.47 an ounce, while platinum rose 0.2 percent to $909.35 an ounce, having hit its highest since April 25 in the previous session.

Palladium was 0.2 percent lower at $970 an ounce, after hitting its highest since April 27 on Monday.

(Reporting by Apeksha Nair in Bengaluru; Editing by Richard Pullin and Subhranshu Sahu)