Gold falls to three-week low as risk appetite rules, safe haven demand wanes

NEW YORK/LONDON — Gold prices fell to a three-week low on Tuesday, as demand for riskier assets drove stocks higher and the dollar hit a six-week peak against the yen.

“Risk appetite is back,” said Societe Generale analyst Robin Bhar.

Rising share prices increase the opportunity cost of holding non- yielding bullion, while a stronger dollar makes gold more expensive for holders of other currencies.

Spot gold was down 0.10% at $1,255.43 an ounce by 2:28 p.m. EDT ( 1828 GMT), having earlier hit $1,251.37, the lowest since April 10 and around the 200-day moving average.

US gold futures settled up 0.10%.

“The moving averages tell us objectively that the long- term trend is no longer bearish. However, gold is yet to break down its long-term bearish trend line, which again held in early April,” said Fawad Razaqzada, technical analyst with Forex.com.

“As a result, we have seen a sharp unwinding of the long positions that had been accumulated since December 2016 and again in March.”

Gold fell 0.90% on Monday after US lawmakers agreed on a spending package to avert a US government shutdown and the Nasdaq share index reached a record high.

Meanwhile, the market’s socalled fear gauge, the VIX volatility index, fell to its lowest since 2007 on Monday. On Tuesday, world stock markets inched higher as investors awaited the outcome of a two- day US Federal Reserve policy meeting to be announced at 2 p.m. EDT (1800 GMT) on Wednesday.

“If the Fed signals further rate increases and shrinking of the balance sheet tomorrow and then we get a good jobs number on Friday we should certainly end the week below $ 1,250, and maybe closer to $ 1,240,” said Societe Generale’s Bhar.

Higher interest rates would cause US bond yields to rise, making non-yielding gold less attractive.

In other precious metals, silver was down 0.40% at $ 16.78 an ounce, after touching $ 16.75, its lowest since Jan. 27. It has fallen for 11 out of the past 12 sessions, putting the spot price on track for the most technically oversold level on a 14- day relative strength index since November 2015.

Platinum was 0.03% lower at $ 924.70, after falling to a fourmonth low at $919.

Palladium was down 0.20% at $813.25. —