Spot gold rose 0.4 percent on Tuesday as global stock markets fell. Asian stocks edged down on Wednesday. Disappointing macro fundamentals data and a sudden surge in uncertainties surrounding the US- China trade talks have made investors shun riskier assets, fuelling demand for safety, said Margaret Yang, market analyst at CMC Markets.
However, a lack of significant movement in Asian equities was limiting gold's gains, Yang added. Gold is often used as a hedge against political and economic uncertainty. "As the risk sentiment is biased towards the bearish side, based on all this data, gold will have more room to go up and potentially challenge the resistance of $1,290-$1,295," Yang said.
Higher interest rates tend to reduce the appetite for non-yielding bullion. Reflecting investors' appetite for gold, holdings of the SPDR Gold exchange-traded fund (ETF), the largest gold-based ETF, was at its highest since June 2018.
"Steady moves in the dollar even after dovish comments from Fed and disappointing macro economic data is restricting gold's movement besides its inability to break above the resistance at $1,300," said Hareesh V, head of commodity research at Geojit Financial Services.
Spot gold may break a support at $1,279 per ounce and fall to the next support at $1,268, as suggested by its wave pattern, a projection analysis and a rising trendline, according to Reuters technical analyst Wang Tao.