Gold down as dollar and stocks gain after U.S. debate

By Zandi Shabalala

LONDON (Reuters) - Gold fell on Tuesday as the dollar and stocks gained ground on the view that U.S. presidential candidate Hillary Clinton got the better of rival Donald Trump in their first debate.

Markets have tended to see Clinton as the candidate of the status quo, while few are sure what a Trump presidency might mean for U.S. foreign policy, trade and the domestic economy.

Gold, which is often seen as an alternative investment in times of geopolitical and financial uncertainty, suffered after the debate as a higher appetite for risk favoured shares, the dollar and the Mexican peso over the precious metal.

Spot gold was down 0.2 percent at $1,335.34 an ounce at 1136 GMT, snapping a six-day winning streak. U.S. gold futures eased 0.3 percent to $1,340.80 an ounce.

ETF Securities analyst Martin Arnold said Clinton came out on top during the debate against Trump, which eased investor uncertainty.

"The debate gave financial markets more optimism over the outlook so it put a little bit of pressure on gold, especially because the U.S. dollar has been supported by its outcome," he said. "It takes away some of the uncertainty that has been weighing on investors' minds."

Some market participants said the U.S. presidential race was still a hot issue, with polls giving Clinton only a slight lead over Trump and this could prevent gold from falling too sharply.

"Gold slipped back slightly on the back of that but this story is far from over. Trump showed his true colours (unpleasant) and this will continue to support gold prices if his poll numbers climb," David Govett, head of precious metals at Marex Spectron wrote in a note.

"The current $1,330-$1,342 range is still in play and participants will be looking closely at the results of the first U.S. presidential debate for direction," MKS PAMP Group trader Sam Laughlin said in a note.

The dollar index, which weighs the greenback against a basket of currencies, was up 0.1 percent at 95.350.

Among other precious metals, silver shed 0.1 percent to $19.40 an ounce after falling 1.2 percent in the previous session, which was its biggest loss over two weeks.

Platinum and palladium were barely changed at $1,035 an ounce and $694.85, respectively.

(Additional reporting by Swati Verma and Vijaykumar Vedala in Bengaluru; editing by David Clarke)