Gold falls below 1-month high as dollar, Treasury yields rise

By Marcy Nicholson and Pratima Desai

NEW YORK/LONDON (Reuters) - Gold prices turned lower on Tuesday, after nearing the prior session's one-month high, as the U.S. dollar, Treasury yields and stock markets extended gains.

Bullion was higher earlier on support from U.S. political and economic uncertainty and expectations of a lower dollar.

Spot gold was down 0.3 percent at $1,249.56 an ounce by 2:34 p.m. EDT (1834 GMT), having touched its highest in a month at $1,261.03 on Monday. U.S. gold futures settled down 0.01 percent at $1,255.60.

"We saw investors cycle out of gold but back into equity markets," said Phillip Streible, senior commodities broker for RJO Futures in Chicago, adding that profit-taking also added pressure to the metal.

"The dollar index and the equity markets are playing the biggest role in the direction of gold right now."

A strong greenback makes dollar-denominated gold more expensive for holders of other currencies, potentially decreasing demand. [FRX/]

The U.S. dollar rallied above Monday's four-month low against a basket of major currencies, while the 10-year Treasury yield and U.S. stock indexes extended gains. [MKTS/GLOB]

The move came as Kansas City Federal Reserve President Esther George said she needs more details on the Trump administration's fiscal proposals.

Prices also responded to technical resistance around $1,260, near the 200-day moving average, while support is expected to kick in at a Fibonacci retracement level of about $1,245.

The Fed raised interest rates this month, boosting the dollar, which could strengthen further on expectations of further rises after comments from its policymakers.

However, some analysts expect the Fed to keep rates on hold for some time, leaving the dollar to drift lower.

Investor demand for gold can be seen in the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares , which reported an inflow of 2.7 tonnes on Monday.

In other metals, spot silver gained 0.1 percent at $18.09 an ounce, after tapping $18.23, the highest since March 2. Spot platinum slid 1.4 percent at $949.95.

Palladium ceded 0.6 percent to $788.22 an ounce. The industrial metal used in autocatalysts hit $815.40 last week, its highest since March last year, on expected growing demand from carmakers.

Analysts, however, are not convinced the fundamentals justify current price levels.

"U.S. car sales are moving sideways, inventories are rising and dealers are upping incentives," said Julius Baer analyst Carsten Menke.

"China's car sales numbers for March will be crucial; profit-taking will be triggered if weakness is confirmed. European sales are solid, but slowing from last year."

(Additional reporting by Arpan Varghese in Bengaluru; Editing by Keith Weir and Richard Chang)