Gold eases in French election afterglow; N.Korea woes limit losses

By Swati Verma

BENGALURU (Reuters) - Gold prices eased on Tuesday as investor sentiment remained skewed towards riskier assets in the wake of the French election results last weekend, though concerns over Korean peninsula limited the safe-haven's losses.

Spot gold was down 0.2 percent at $1,272.67 per ounce as of 0700 GMT.

U.S. gold futures slipped 0.3 percent at $1,274.20.

Bullion prices fell about 0.7 percent in the previous session after touching $1,265.90 an ounce, the lowest since April 11, following the first round of France's presidential election that indicated less support for far-right candidate Marine LePen.

"People are going on the risk-on scenario (after French election results), but gold didn't really fall too far away," said Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo.

"There are more people who are still worried about not only France but other European countries, Trump policies and North Korean worries... investors prefer to hold gold rather than sell it off."

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

"Traders remained cautious through the day with North Korea celebrating military foundation day (85 years of militarised N. Korea), with a very real prospect of possible provocation to demonstrate their military prowess," said MKS PAMP Group trader Alex Thorndike.

North Korea conducted a big live-fire exercise on Tuesday to mark the foundation of its military, media reported, as a U.S. submarine docked in South Korea in a show of force amid growing concern over Pyongyang's nuclear and missile programmes.

Holdings of SPDR Gold, the world's largest gold-backed exchange-traded fund, rose 0.17 percent to 860.17 tonnes on Monday. Holdings have risen 6 tonnes in the past two sessions, indicating investor's interest in the safe-haven asset.

On the technical front, gold, however, does not have a rosy picture with the potential of a decent downside correction if and when uncertainty fades, said Jeffrey Halley, senior market analyst at OANDA.

"Gold has resistance at $1,290 and then $1,296, having failed in this area numerous times last week. Below, support lies at $1,265.50 and then the 200-day average at $1,254.80. A daily close below $1,240 would signal a much larger correction could be on the way."

Goldman Sachs, in a note on Monday, said it continues to expect gold to come under pressure in the near term on a potential rally in real interest rates following the expected unveiling of President Trump's tax policies on Wednesday or later.

Silver dipped 0.2 percent to $17.87 an ounce, after touching a one-month low of $17.65 in the previous session.

Platinum was down 0.1 percent at $957.80 an ounce, after falling over 1 percent in the prior session.

Palladium fell 0.3 percent to $793.05 an ounce.

(Reporting by Swati Verma and Nallur Sethuraman in Bengaluru; Editing by Christian Schmollinger and Sherry Jacob-Phillips)