Gold fell more than 1% on Tuesday as major economies further eased coronavirus-led restrictions, fuelling hopes of economic recovery and bolstering risk appetite.
Spot gold slipped 1.1% to $1,710.72 per ounce. U.S. gold futures shed 1.3% to $1,713.50.
“There is a risk-on tone in the market, driving the reversal of (gold’s) safe-haven flows,” said Daniel Ghali, commodity strategist at TD Securities.
U.S. stocks surged as investors grew optimistic about business restarts and a potential coronavirus vaccine.
Spain urged foreign tourists to return from July as it eases one of Europe’s strictest lockdowns, while Britain will reopen thousands of shopping centres next month. U.S. states were also gradually easing restrictions.
“Gold could sink lower towards $1,700 if $1,715 proves to be unreliable support. A breakdown below $1,700 could crack open the doors towards $1,680,” said FXTM analyst Lukman Otunuga. “Nevertheless, the downside is likely to be cushioned by trade woes, disappointing economic data and growth fears.”
Deepening the rift between the world’s two largest economies, White House National Security Adviser Robert O’Brien warned that China’s proposed national security legislation for Hong Kong could lead to U.S. sanctions.
Gold, considered a safe store of value during political and financial uncertainty, climbed to its highest since October 2012 last week, driven by monetary and fiscal stimulus, recession fears and U.S.-China tensions.
“Investment demand will continue to strengthen as the U.S. Federal Reserve’s stimulus will remain in place for quite a substantive amount of time,” TD Securities’ Ghali added.
Elsewhere, palladium dropped 1.8% to $1,955.03 per ounce and platinum fell 1.7% to $823.79, while silver was 0.5% lower at $17.11.
Mining output in South Africa, the world’s biggest producer of platinum and a leading producer of gold, could fall by 8%-10% this year due to the pandemic, according to Roger Baxter, CEO of industry body the Minerals Council.