Gold near 2-week low on firm dollar, equities

Don't want to miss the best from Business Standard?

By Marcy Nicholson and Clara Denina

NEW YORK/LONDON (Reuters) - Gold fell to a near two-week low on Tuesday, after its steepest loss since March in the prior session, as a firm dollar and higher equities curbed appetite for the precious metal.

Bullion turned quietly positive in late-day dealings after falling in five out of the past six sessions, failing to fully benefit from data last week showing that the U.S. economy added the fewest jobs in seven months in April.

Spot gold was up 0.3 percent at $1,267.30 an ounce by 3:03 p.m. EDT (1903 GMT), after hitting an early low of $1,257.25, its weakest since April 28.

U.S. gold for June delivery settled down 0.1 percent at $1,264.80 an ounce.

Spot prices rose as much as 23 percent this year and are still up 19 percent in 2016 so far as expectations for a near-term increase in U.S. interest rates ease. Higher rates would bolster the dollar, while lifting the opportunity cost of holding gold.

"The drivers that have lifted gold prices still remain largely intact, including the continuous wavering of the Fed in terms of the rate increases and the softening of the dollar, which introduced a layer of uncertainty in investors' mind sets that tends to support the precious metal," said Nitesh Shah, ETF Securities director of commodity research.

The dollar index was up 0.2 percent, having hit its highest in nearly two weeks in the Asian trading session and extending its rise from a 15-month trough struck on May 3.

World stock markets rallied as oil prices climbed and companies reported solid earnings, while the yen again retreated against the dollar. [MKTS/GLOB]

"Investors are in a slight risk-on mode right now and it's leaning on gold a bit," said James Steel, chief metals analyst for HSBC Securities in New York.

"Gold is still correcting but the pace of decline appears to be moderating."

Gold, which reached a 15-month high of $1,303.60 last week, will find the $1,300 level a tough barrier, as the investment seen so far this year is unlikely to be replicated when physical demand is so poor, ICBC Standard Bank analyst Tom Kendall said.

On the physical market, Indians bought a third less gold than last year during the annual Hindu and Jain holy festival of Akshaya Tritiya on Monday, industry officials estimate.

Silver rose 0.7 percent to $17.12 an ounce, platinum was up 1.2 percent at $1,050.50 and palladium gained 1.6 percent to $592.75.

(Additional reporting by Manolo Serapio Jr.; Editing by Keith Weir and Sandra Maler)