Gold Holds Near Two-Week Low After Worst Day Since April

Singapore: Gold held near a two-week trough early on Wednesday after sliding almost 2 per cent in the previous session as strong U.S. data suggested the Federal Reserve may be on course to raise interest rates this year.

The dollar also held on to broad gains following a rally that pushed bullion to its steepest single-day fall since April 30.

Spot gold was little changed at $1,188.20 an ounce by 0040 GMT. It dropped to $1,185.35 on Tuesday, its weakest since May 12.

U.S. gold was also nearly flat at $1,187.60 an ounce.

A gauge of U.S. business investment spending plans rose solidly for a second straight month in April and consumer confidence perked up this month, adding to signs economic growth was picking up after sputtering in the first quarter. U.S. new home sales also climbed last month.

The strong U.S. data were in line with Federal Reserve Chair Janet Yellen's upbeat comments last week that indicated the U.S. central bank is poised to raise interest rates later this year.

Yellen's comments had fuelled the dollar's rally to an eight-year high versus the yen and it also rose against the euro, making dollar-denominated assets such as gold more costly for buyers using other currencies.

U.S. Federal Reserve Vice Chairman Stanley Fischer said a U.S. rate hike may trigger bouts of volatility in global financial markets.

Top gold miner Barrick Gold Corp has forged a strategic tie-up with Zijin Mining Group Co and agreed to sell the Chinese miner a stake in a mine in Papua New Guinea as a first step towards further collaboration.

Russia is increasing its gold holdings because gold is a reserve asset that is free from legal and political risks, a senior central banker said.