Gold prices slip on rising US dollar, equities

[BENGALURU] Gold prices fell in holiday-thinned trade on Monday as the dollar strengthened and share markets rose, though lingering trade tensions between the United States and China limited losses for the safe-haven metal.

Spot gold was down 0.3 per cent at US$1,729.05 per ounce by 0924 GMT. US gold futures fell 0.4 per cent to US$1,729.40.

Most markets were closed in the United States, Britain and some countries in Asia for public holidays.

"The main driver probably why gold is down is because the (US) dollar is slightly stronger and also the risk sentiment, in spite of renewed tensions between the US and China seems to be still on the positive side," UBS analyst Giovanni Staunovo said. The US dollar rose against its key rivals, making gold more expensive for holders of other currencies.

European shares gained as optimism over easing of lockdowns and signs of more stimulus for the battered euro zone economy helped sentiment.

On the geopolitical front, China's proposed national security legislation for Hong Kong could lead to US sanctions, White House National Security Adviser Robert O'Brien said on Sunday.

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US-China tensions have risen in the past few weeks over the source of the novel coronavirus pandemic, which has infected more than 5.40 million people globally.

"Trade war tensions are on the rise, which should continue to hold a bid under gold prices over the short term supported by the bullish cocktail of economic, trade, and geopolitical factors," Stephen Innes, chief market strategist at financial services firm AxiCorp, said in a note.

Indicative of sentiment, SPDR Gold Trust holdings rose 0.4 per cent to 1,116.71 tonnes on Friday, while speculators increased their bullish positions in COMEX gold and silver contracts in the week to May 19.

Elsewhere, palladium gained 0.9 per cent to US$1,964.09 per ounce, while platinum dropped 1.6 per cent to US$826.76, and silver slipped 0.7 per cent to US$17.06.

REUTERS