Gold at two-week low on French election, heightened risk appetite

NEW YORK/LONDON — Gold prices fell to a two-week low on Tuesday as markets became less concerned that far-right leader Marine Le Pen would win the French presidential election, increasing investor appetite for risky assets such as stocks while denting bullion.

Spot gold was down 0.90% at $ 1,264.25 an ounce by 2: 53 p.m. EDT (1853 GMT), on track for its weakest one- day performance since March 2. It fell earlier to $ 1,261.41, the lowest since April 11.

US gold futures settled down 0.80% at $1,267.20.

A gauge of world stocks notched a record for a second straight session, spurred by speculation about US tax reform and relief at French election results, while the 10-year US Treasury yield rallied to a two-week high.

Business- friendly centrist Emmanuel Macron won the first round of the French vote on Sunday and opinion polls indicated less support for Ms. Le Pen.

“We’ve moved from having multiple numbers of positive drivers for gold last week when yields were on the defensive and we had multiple geopolitical risks,” said Ole Hansen, head of commodity strategy at Saxo Bank.

“But now with the French election (first round) behind us, there is a bit of a surge of risk-on coming back to the market. The main worry was a strong performance by Le Pen.”

Gold is often seen as an alternative investment during times of political and financial uncertainty.

Heightened security risks provided some support. North Korea conducted a live- fire exercise on Tuesday as a US submarine docked in South Korea in a show of force.

Mr. Hansen said gold would trade cautiously this week before a Friday deadline for the US Congress to pass a spending bill funding the government through September or risk a government shutdown.

Holdings of SPDR Gold, the world’s largest gold- backed exchange-traded fund, rose six tons in the past two sessions.

Silver dipped 1.70% at $17.59 an ounce after touching a onemonth low at $17.51.

“Silver’s fundamentals look to be price supportive, but overextended investor positioning poses downside risk near- term,” said Standard Chartered in a note.

“Investor and industrial demand tend to drive silver prices but the supply side has now started to turn. We estimate supply fell by just under 1% last year, and will decline at a similar pace this year.”

Among other precious metals, palladium was up 0.20% at $ 796.55 while platinum inched down 0.40% to $955.30 an ounce. —