Gold slips as dollar and shares rise

By Zandi Shabalala

LONDON (Reuters) - Gold fell 1 percent on Wednesday as the dollar and stocks gained, though tensions over North Korea and upcoming French and UK elections underpinned demand in the safe-haven asset.

Spot gold fell as low as $1,275.73 per ounce, and was trading at $1,279.91 per ounce, down 0.7 percent by 1445 GMT.

U.S. gold futures were 0.9 percent lower at $1,282.

"The dollar is down and European equity markets are also down which moves against gold because it's a safe-haven asset," said Carsten Menke, an analyst at Julius Baer, adding that the market was also beginning to discount President Trump's influence on U.S. policy.

A stronger greenback makes dollar-denominated assets such as gold more expensive for holders of other currencies and higher appetite for risk boosts stocks and puts pressure on bullion.

A run of disappointing U.S. economic data and doubts the Trump administration will progress with tax cuts have quelled expectations of faster inflation.

The dollar index advanced 0.3 percent while European shares rose. [MKTS/GLOB]

However, gold's losses were capped by uncertainties over elections and geopolitical tensions.

U.S. Vice President Mike Pence said Washington would work with its allies and China to put economic and diplomatic pressure on North Korea but added America would defeat any attack with an "overwhelming response."

"Investors are still using gold for insurance and defensive positioning because there are concerns over equity valuations and politics," said ETF Securities analyst Martin Arnold.

In France, investors remained nervous ahead of the first round of the presidential election on Sunday. A closely-watched poll showed the first round of voting was too close to call, although centrist Emmanuel Macron remained favourite to win.

British Prime Minister Theresa May's call for a snap general election added to a list of uncertainties for investors.

Wing Fung Financial Group's head of research Mark To said he expected gold prices to hover near $1,280, trading in a range between $1,270 and $1,310.

MKS PAMP Group trader Sam Laughlin said gold should find support around $1,280 and $1,276, and was well positioned to test $1,300.

Spot silver dropped 0.5 percent to $18.13 per ounce.

Platinum fell 0.6 percent to $976.70, while palladium was flat at $774 after touching a more than four-week low of $769.80 on Tuesday.

(Additional reporting By Nallur Sethuraman in Bengaluru; Editing by Edmund Blair and Elaine Hardcastle)