NEW YORK/LONDON Gold fell on Tuesday, snapping a five-day winning streak as better-than-expected U.S. manufacturing data further diminished chances of additional U.S. monetary easing and the precious metal's investment appeal.
With most markets in Europe and several major Asian markets closed for the May Day holiday, investors shifted their attention to the Institute for Supply Management's April index of U.S. factory activity, which rose to 54.8, the strongest in 10 months, from 53.4 in March.
The metal has lost $125 since Feb 28 after a strong run of U.S. economic indicators dashed hopes of Fed easing that could have provided an underpinning for gold. It posted a small loss in April which marked the first time since 2000 it fell three months in a row.
Gold is still up 6 percent year to date, after the U.S. central bank said in January it would keep interest rates near zero until at least 2014 to stimulate economic growth
"The better the economic number, the lower the chance that we are going to see lower U.S. rates through 2014," said David Meger, director of metals trading of Vision Financial.
Spot gold was down 0.1 percent at $1,663.11 an ounce by 3:11 p.m. EDT (1911 GMT). Tuesday's loss ended the metal's five-day rally which saw prices climb 1.6 percent.
U.S. gold futures for June delivery settled down $1.80 at $1,662.40. Trading volume was about 30 percent below its 30-day average, preliminary Reuters data showed.
On charts, gold's repeated failure to rise above key resistance at its 100-day moving average dampened sentiment among momentum traders. The metal briefly rose above that level on Tuesday but ended about $5 below it.
Still, investor demand remained resilient as holdings for the yellow metal in exchange-traded products posted their largest one-day net inflow in a month on Monday.
A recent spate of soft U.S. data revived some expectations that the Fed would offer additional support to the economy via a third round of quantitative easing, or purchases of government bonds to anchor market interest rates.
Gold benefits from low interest rates as it increases its appeal against other interest-yielding assets. Loose monetary policy could also create a pick-up in inflationary pressures, something gold can help portfolio managers guard against.
However, Philadelphia Federal Reserve President Charles Plosser said the Fed may need to rethink its conditional promise to hold rates at rock-bottom levels until late 2014.
Platinum group metals investors are digesting news General Motors Co (GM.N) and Ford Motor Co (F.N) both reported a smaller-than-expected decline in U.S. new vehicle sales in April. GM, the largest U.S. automaker, raised its full-year forecast for the industry due to a strengthening economy.
Platinum was up 0.3 percent on the day at $1,566.80 an ounce, while palladium edged down 0.2 percent at $676.75 an ounce.
Silver inched down 0.1 percent on the day at $30.96 an ounce.
(Additional reporting by Rujun Shen in Singapore; Editing by Alden Bentley and Sofina Mirza-Reid)