Gold pared losses on Tuesday as jewellers and speculators looked for bargains, but the metal was under downward pressure after U.S. stocks gained ahead of an earnings season that is expected to show modest growth.
Speculators have also slashed their net longs as gold ignored tension between the two Koreas, and investors shifted their money to equities, seeking better returns, despite concern about the health of the U.S. economy. Gold fell as low as $1,569.94 an ounce and stood at $1,574.39 by 0343 GMT, up $1.30.
It plunged to a 10-month low last week after unprecedented monetary stimulus from the Bank of Japan and hopes for another European Central Bank rate cut failed to stem heavy selling of bullion by funds.
"I can say the chart point doesn't look good. The bond and stock markets are more interesting than gold," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "I think $1,585 is the crucial point. If it can break above this level, another bull run or short covering will push up the market to $1,600."
Gold rallied to an 11-month high in October last year after the U.S. Federal Reserve announced its third round of aggressive economic stimulus, raising fears the central bank's money-printing to buy assets will stoke inflation. Gold has fallen around 6 percent so far this year after having posted an annual gain in each of the past 12 years.
U.S. gold for June delivery was $1,574.60 an ounce, up $2.10. Institutional investor George Soros said gold had been destroyed as a safe-haven asset, but that he expected continued central bank buying to support prices, the South