Gold slips to over two-week low as stronger dollar, stocks weigh
By Brijesh Patel
May 21 (Reuters) - Gold prices dropped to a more than two-week low on Tuesday, as investors opted for the dollar and improved appetite for riskier assets dented the appeal of bullion, while markets awaited the release of minutes from the U.S. Federal Reserve.
Spot gold XAU= slipped 0.4% to $1,272.55 per ounce as of 10:50 a.m. EDT (1450 GMT), having touched its lowest since May 3 at $1,268.97 earlier in the session.
U.S. gold futures GCcv1 were also down 0.4% at $1,272.10.
"One big reason is that the U.S. dollar remains pretty strong. What we are seeing, in a strange way, money is flowing towards the dollar as a safe-haven," said Bart Melek, head of commodity strategies at TD Securities in Toronto.
"Also, we have little bit of risk appetite on the stock futures, so less of a reason to go into gold as a hedge," he added.
The dollar index .DXY climbed to its highest in nearly a month, supported by higher U.S. yields and as fears of the economic fallout from the U.S.-China trade row prompted investors to choose the safety of the U.S. unit over bullion. USD/
Gold is usually used as a safe store of value during times of uncertainty, however, investors are preferring the dollar as they did last year during the U.S.-China trade spat.
Meanwhile, equity markets around the world gained momentum after the United States temporarily relaxed curbs on China's Huawei Technologies, easing concerns over a further escalation in the U.S.-China trade war. MKTS/GLOB
Investors now await Fed minutes due on Wednesday, which is expected to provide insights into the May 1 central bank meeting in which policymakers decided to keep interest rates steady and signalled little appetite to adjust them any time soon.
"Not much is expected to happen on the policy side. I think they might talk about potential downside risks from trade tensions but does not expect any significant and credible statements pointing to a rate cut this year," Melek said.
On Monday, Fed Chair Jerome Powell said that it was premature to ascertain the impact of trade and tariffs on the trajectory of monetary policy, instead pointing recent economic data pointed towards a healthy supply side.
"From a technical point of view, a first positive signal (for gold) would be a recovery to $1,290, while a fall below the recent low of $1,266 could open space for a further decline," said ActivTrades analyst Carlo Alberto De Casa.
Among other precious metals, silver XAG= eased 0.1% to $14.44 an ounce.
Platinum XPT= rose 0.3% to $813.90 an ounce and palladium XPD= was mostly unchanged at $1,328.70.
(Reporting by Brijesh Patel in Bengaluru Editing by Marguerita Choy)