Gold edges up, but safe-haven demand starts to fade

By Swati Verma

BENGALURU (Reuters) - Gold prices inched up on Tuesday, but stayed near two-week lows as a stronger dollar, rising U.S. Treasury yields and receding geopolitical worries crimped safe-haven demand for the metal.

After falling for the three previous sessions, spot gold had edged up 0.1 percent to $1,325.81 per ounce by 0417 GMT. That was not far from a low of $1,321.81 touched on Monday, its weakest since April 6.

U.S. gold futures rose 0.3 percent to $1,327.80 per ounce.

"Gold is going up and down with views on risk-aversion ... less risk-aversion is pushing it down. We feel that there could be more downward pressure on gold in the near-term," said John Sharma, an economist with National Australia Bank.

"(A strong) dollar makes gold expensive for non-U.S. buyers and rising yields increase the opportunity cost of holding gold, which is another factor lessening gold's appeal."

The dollar rose to more than three-month highs against a basket of currencies as the U.S. 10-year Treasury yield climbed towards the psychologically key 3 percent level. The U.S. 10-year Treasury yield hit its highest in over four years on Monday.

Gold prices also came under downward pressure from an improvement in the geopolitical environment, with the U.S. Treasury Secretary cautiously optimistic on his negotiations with China, North Korea freezing its nuclear testing, and Washington extending its deadline for sanctions against Russia's Rusal, said OCBC analyst Barnabas Gan.

Palladium plunged 5 percent on Monday after the United States gave American customers of Russia's biggest aluminium producer, Rusal, more time to comply with sanctions.

Rusal owns a 28-percent stake in Norilsk Nickel, the world's biggest palladium producer.

Palladium was up 0.5 percent on Tuesday at $983.22 an ounce.

Silver rose 0.9 percent to $16.67 an ounce, having fallen over 3 percent in the previous session.

Platinum was 0.2-percent higher at $919.70.

(Reporting by Swati Verma in Bengaluru; Editing by Richard Pullin and Joseph Radford)