April 25, 2017 / 10:48 AM / 3 years ago

PRECIOUS-Gold at 2-week low on French election, heightened risk appetite

    * Spot gold on track for weakest session since March 2
    * SPDR Gold holdings up 6 tonnes in last two sessions
    * Silver slips to one-month low

 (Updates prices, adds comment, byline, NEW YORK dateline)
    By Marcy Nicholson and Zandi Shabalala
    NEW YORK/LONDON, April 25 (Reuters) - Gold prices fell to a
two-week low on Tuesday as markets became less concerned that
far-right leader Marine Le Pen would win the French presidential
election, increasing investor appetite for risky assets such as
stocks while denting bullion.
    Spot gold        was down 0.9 percent at $1,264.25 an ounce
by 2:53 p.m. EDT (1853 GMT), on track for its weakest one-day
performance since March 2. It fell earlier to $1,261.41, the
lowest since April 11.
    U.S. gold futures         settled down 0.8 percent at
$1,267.20.
    A gauge of world stocks notched a record for a second
straight session, spurred by speculation about U.S. tax reform
and relief at French election results, while the 10-year U.S.
Treasury yield rallied to a two-week high.             
    Business-friendly centrist Emmanuel Macron won the first
round of the French vote on Sunday and opinion polls indicated
less support for Le Pen.             
    "We've moved from having multiple numbers of positive
drivers for gold last week when yields were on the defensive and
we had multiple geopolitical risks," said Ole Hansen, head of
commodity strategy at Saxo Bank.
    "But now with the French election (first round) behind us,
there is a bit of a surge of risk-on coming back to the market.
The main worry was a strong performance by Le Pen."
    Gold is often seen as an alternative investment during times
of political and financial uncertainty.
    Heightened security risks provided some support. North Korea
conducted a live-fire exercise on Tuesday as a U.S. submarine
docked in South Korea in a show of force.             
    Hansen said gold would trade cautiously this week before a
Friday deadline for the U.S. Congress to pass a spending bill
funding the government through September or risk a government
shutdown.              
    Holdings of SPDR Gold, the world's largest gold-backed
exchange-traded fund, rose six tonnes in the past two sessions.
    Silver        dipped 1.7 percent at $17.59 an ounce after
touching a one-month low at $17.51.
    "Silver's fundamentals look to be price supportive, but
overextended investor positioning poses downside risk
near-term," said Standard Chartered in a note.
    "Investor and industrial demand tend to drive silver prices
but the supply side has now started to turn. We estimate supply
fell by just under 1 percent last year, and will decline at a
similar pace this year." 
    Palladium        was up 0.2 percent at $796.55 while 
platinum        inched down 0.4 percent to $955.30 an ounce.
    Asset manager ETF Securities said in a note it expects
"modest upside" for platinum given "expectations for continued
global recovery in growth and manufacturing, and a record
discount to the gold price."

 (Additional reporting by Swati Verma and Nallur Sethuraman in
Bengaluru; editing by David Evans and Chizu Nomiyama)
  
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