Gold loses its shine as dollar, stocks rise on risk appetite

By Zandi Shabalala

LONDON (Reuters) - Gold prices eased on Wednesday as the dollar and stocks advanced, pointing to higher demand for riskier assets driven by upbeat U.S. economic data and a slew of strong corporate earnings reports.

Spot gold was marginally firmer at $1,346.42 per ounce at 0942 GMT, while U.S. gold futures for June delivery were steady at $1,349.30 per ounce.

Activtrades chief analyst Carlo Alberto De Casa said a stronger dollar was the main reason for gold losing its lustre, adding that the precious metal faced resistance at $1,350-70.

"It's a key area because if gold can jump above $1,370 then we have an open door up to $1,400, at least. If gold can pass these peaks this would mean the upward trend is confirmed and could be even stronger," he said.

The dollar index, which measures the greenback against a basket of currencies, pulled away from a three-week low reached on Tuesday, lifted by stronger-than-expected March U.S. housing starts and steady industrial production figures. A stronger greenback makes dollar-priced gold costlier for holders of other currencies.

Robust earnings from Netflix, Morgan Stanley and Goldman Sachs this week dented non-interest yielding gold and lifted stocks.

Declining political risk added pressure on the precious metal as it was announced that South Korea and North Korea would hold talks to potentilly change a decades-old armistice into a peace agreement, and as U.S. officials confirmed an unprecedented top-level meeting with the North Korean leader.

Gold generally dips when global political and financial risk reduces as investors opt for higher returning assets such as stocks.

The gold market has also seen some booking of profits from recent peaks, said Hareesh V, head of commodity research at Geojit Financial Services.

Meanwhile, spot silver climbed 0.2 percent to $16.78 per ounce, after touching a one-week high of $16.83 earlier in the session.

Platinum gained 0.5 percent to $941.10 per ounce, after hitting a three-week high of $945.10.

Palladium rose 0.5 percent to $1,012.97 per ounce, having touched its highest level since March 1.

The metal used in autocatalysts in cars was spurred by fears of Russian supply disruptions after the United States' recent imposition of sanctions on shareholders of Nornickel, the world's largest producer.

"We believe the recent rally is mainly driven by speculation and the gains are on a weak footing," Julius Baer said, adding that sanctions were unlikely to be extended to Nornickel itself.

(Additional reporting by Eileen Soreng and Apeksha Nair in Bengaluru; Editing by Susan Fenton)