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Gold prices dropped on Tuesday after a 1% increase in the previous session as investors awaited US jobs data later in the week to gauge the health of the labor market and its potential impact on Federal Reserve's rate cuts in September.
As of 0826 GMT, spot gold was down 0.5% at $2,335.97 per ounce, reaching its lowest level in nearly a month on Monday before a 1% increase. US gold futures were also down 0.6% at $2,355.50.
According to Reuters, the ADP employment report is scheduled for Wednesday before Friday's non-farm payrolls data.
Kelvin Wong, a senior market analyst for Asia Pacific at OANDA, stated that if the payrolls data exceeds 200,000, gold prices might decline further and potentially break the $2,320 support level. However, technical factors still indicate near-term positivity due to the support level and weaker-than-expected manufacturing numbers causing yields to fall.
In India, share markets saw a sharp decline after early vote counting indicated that Prime Minister Narendra Modi's Bharatiya Janata Party (BJP)-led alliance was not headed for a predicted landslide win.
This led to subdued demand for gold due to restrictions on cash transactions during the election period. ANZ commodity strategist Soni Kumari suggested that once the election is over, pent-up demand for gold may emerge as the wedding season is ongoing. Additionally, if equities continue to decline, some funds may flow into gold.
In the realm of other precious metals, spot silver fell 2.5% to $30.01 per ounce, platinum was down 0.4% at $1,008.00, and palladium lost 0.3% to $915.00.
Ajay Kedia, director at Kedia Comm, noted that the Modi government's focus on industrial growth, particularly in solar projects, may benefit silver due to improving industrial demand.
