Gold off 7-week high as oil slips on Goldman forecast

Gold saw some correction on Tuesday (7 April) off the 1-1/2-month high touched in the previous session as oil eased on Goldman Sach's prediction of lower crude prices.

The yellow metal slipped to $1,210.10 from Monday's close of $1214.74, further distancing from $1,224.23, its highest since 17 February.

Brent for spot delivery dropped to $57.39 from the previous close of $57.83. The commodity had rallied more than 5% to hit a 10-day high of $58.21 on Monday.

Goldman said in a note that it saw little upside for its $40/bbl forecast over the next three months.

"Prices need to remain low in coming months to achieve a sufficient and sustainable slowdown in US production growth," the bank said, adding that the outlook for US production in 2016 in turn leaves risk to the $65 per barrel forecast as skewed to the downside.

According to the investment bank, US crude inventories would likely rise again by October, increasing downward pressure on prices into 2016.

The US dollar index, after hitting a near one-month low of 96.33 on Monday during early trades, had ended the session higher at 97.16 but has eased to 96.93 early Tuesday in Asia.

The US services outlook has improved, according to the Markit PMI for March which has increased to 59.2 from 58.6 as per data on Monday. However, the ISM non-manufacturing index has eased to 56.5 from 56.9, though it was along expected lines.

The labour market conditions index for March has fallen to -0.3 from the February reading of 4.0 in line with the negative surprise of the non-farm payrolls figures released on 3 April.

No major data is scheduled from the US on Tuesday and all eyes are therefore on the FOMC minutes on Wednesday (8 April).