Gold drops on firmer dollar

Gold prices dipped on Tuesday as the dollar firmed, while investors shied away from making big bets ahead of US economic data that could determine the Federal Reserve's rate-hike strategy, reports Reuters.

Spot gold fell 0.5 per cent at $1,978.72 per ounce by 1141 GMT, while US gold futures also slipped 0.5 per cent at $1,989.00.

The dollar index rose 0.3 per cent, making bullion more expensive for overseas buyers.

Investors are expecting a 90 per cent chance of a 25-basis point hike by the US central bank at its May 2-3 policy meeting.

"We believe prices at $2,000 per ounce or above are only justified in case of a broad-based and longer-lasting US recession, accompanied by a return of safe-haven seekers," Carsten Menke, head of Next Generation Research at Julius Baer, wrote in a note.

Gold is a safe investment amid economic uncertainties while rising interest rates increase the opportunity cost of holding zero-yielding gold, denting its appeal.

According to Reuters technical analyst Wang Tao, spot gold may end its bounce below a resistance at $2,009 per ounce, and resume its downtrend thereafter.