London: Gold prices steadied above $1,570 an ounce on Tuesday as renewed strength in stock markets and a weaker tone to the dollar lent support, but the metal struggled for traction after plumbing 10-month lows last week.

A positive start to US earnings season and well-received Chinese inflation data helped lift European shares for a second day, and underpinned the euro. That helped support investment appetite for other assets, including gold.

Spot gold were little changed at $1,573.86 an ounce at 1220 GMT, while US gold futures for June delivery were up 0.2 per cent at $1,575.90.

A weaker tone to the dollar, which fell a quarter-per cent against a basket of major currencies, also underpinned prices. Investors remain cautious towards the metal, however, after it slipped sharply last week in the wake of weak US jobs data.

“Many are simply undecided and the short sellers still smell the potential for a major reward should this weakness continue,” Saxo Bank Vice-President Ole Hansen said. “Buyers have become a bit disillusioned with many probably preferring to sit it out until we make a move back above $1,620.”

Traders will be closely watching minutes from the Federal Reserve’s latest policy meeting for clues on US monetary policy, particularly any changes to its quantitative easing policy, he said.

“Fed minutes tomorrow may give us a clue as to how strong the QE conviction is and with US data hitting a bit of a soft patch I see no major downside risk to gold,” Hansen said. “But now there is still the worry that the multi-year rally is over.”

European shares held on to gains around midday on Tuesday as miners rose on higher metals prices after Chinese data strengthened demand prospects and after Alcoa kicked off the US earnings season with a rise in profits.

The euro was up 0.1 per cent against the dollar, having hit a three-week high in earlier trade after stop-loss buying was triggered near $1.3050. The dollar index was down 0.3 per cent.

BANKS FORECAST LOWER GOLD PRICES IN 2013

Deutsche Bank cut its 2013 gold price forecast by 12 per cent to $1,637 an ounce, saying returns from the metal may be on course for their worst annual performance since 2000.

“The forces which have propelled gold returns higher over the past decade, namely a weakening US dollar, falling real interest rates and a rising US equity risk premium have all moved into reverse since the end of last year,” it said.

Danske Bank meanwhile said it sees gold averaging $1,495 an ounce this year, while National Australia Bank said it sees gold at an average $1,558 an ounce, both well below last year’s record average price of $1,668 an ounce.

Gold’s 5.8 per cent slide so far this year has taken it to within $20 of long-term technical support at $1,521 an ounce, according to analysts who study past chart patterns to determine the future direction of trade.

“A clear and sustained break would complete an important top and would fully confirm the major bull cycle experienced during 2001 through to 2011 to be over,” independent consultant Cliff Green told the Reuters Global Gold Forum on Tuesday.

“Basic chart measurements suggest initial falls toward the $1,400 area.”

Hong Kong’s net gold flow to mainland China rebounded last month from three-month lows in January, reflecting increased demand ahead of the Lunar New Year holiday and as buyers took advantage of weaker prices, data showed on Tuesday.

Gold exports from the former British colony to China, the world’s No 2 gold consumer after India, climbed to 97.106 tonnes in February from 51.303 tonnes the previous month, data from the Hong Kong Census and Statistics Department showed.

Among other precious metals, silver was up 0.6 per cent at $27.43 an ounce, while spot platinum was up 0.4 per cent at $1,537.99 an ounce and spot palladium was down 0.2 per cent at $728.22 an ounce.