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Gold falls on improved risk sentiment, dollar recovery

Reuters  |  BENGALURU 

By N R

BENGALURU (Reuters) - Gold prices fell on Tuesday as risk appetite improved on bets and the may be closing on a trade deal, and as the dollar bounced off a 2-1/2-month low hit in the previous session.

Spot gold was down 0.6 percent at $1,281.32, as of 0738 GMT, while U.S. gold futures were 0.5 percent lower at $1,283.10 per ounce.

"Because of improved investor sentiment, gold is coming off its highs and may have to stay around the current levels," said Mark To, at Wing Fung Precious Metals in Hong Kong.

"The market has been troubled by uncertainties around trade war and interest rate hikes. However, now most of the stake holders, including the authorities in U.S., and Fed, are trying to cooperate and put up a positive tone and create a stable environment for investors."

Asian shares were mixed on Tuesday, following a surge in Wall Street. But, investors hope that and may be inching towards a trade deal after positive comments from U.S.

"A lot of people had gone long in gold as they bet that economic growth in U.S. and might slow down due to the trade war," said Kunal Shah, at Commodities in

"If there are positive outcomes (in the trade talk) there could be some profit taking (in gold)."

The dollar index was up about 0.3 percent, moving away from a 2-1/2-month low hit in the previous session after U.S. Federal Reserve hinted on Friday that the central could pause its multi-year rate-hike cycle.

Gold is trading lower as the dollar is showing early signs of shaking off its recent bout of Fed-induced weakness, said Stephen Innes, at

"However, the positive chatter around U.S.-China trade tensions will temper expectations (for the dollar)," Innes said.

A weaker dollar makes dollar-denominated gold more affordable for buyers using other currencies.

Gold prices have gained about 11 percent since hitting a more than 1-1/2-year low in mid-August due to tumultuous stock markets and a slightly weaker dollar. Bullion prices hit their highest since June 2018 at $1,298.42 on Friday.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, saw a bit of outflows on Friday. But, holdings are still at their highest since August 2018, underpinning demand for the safe-haven

Palladium, was flat at $1,299.30 an ounce, but was still in the vicinity of the record high of $1,313.24 hit in the previous session. The was trading at a premium to gold.

Silver edged about 0.9 percent lower to $15.51 per ounce, while platinum fell 0.7 percent to $816.50, having hit its highest in more than a month at $831.10 on Monday.

(Reporting by and in Bengaluru; Editing by and Subhranshu Sahu)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, January 08 2019. 13:21 IST