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[LONDON] Gold edged lower on Tuesday as global equities rallied on easing political uncertainty in Britain and hopes for more economic stimulus measures, which in turn curbed demand for assets perceived as a haven.
Spot gold was down 0.2 per cent at US$1,352.06 an ounce by 0940 GMT after falling nearly one per cent on Monday, which was its biggest decline in almost two weeks, US gold was down 0.1 per cent at US$1,355.30 an ounce.
"Tensions in Britain are easing for now, as the country will soon have a new prime minister," ActivTrades chief analyst Carlo Alberto de Casa said.
"With the British pound gaining some ground, demand for gold and other safe havens is also decreasing," Mr De Casa said, adding that the next support level for gold was around US$1,340 an ounce.
Gold has gained about US$100 an ounce since the United Kingdom voted to leave the European Union, as worried investors piled their cash into safe-haven assets.
However, Asian stocks hit a 2-1/2-month peak on Tuesday and European shares were on track for a fourth straight day of gains on hopes of more stimulus from global policymakers.
Japan's ruling coalition fanned expectations of more fiscal stimulus, while the Bank of England could cut rates as soon as Thursday following its monthly policy meeting.
Markets were also assessing whether the latest US jobs data has boosted the prospects for an interest rate increase by the US Federal Reserve.
Gold came under pressure after strong US non-farm payrolls data on Friday boosted some expectations for a US rate rise.
Kansas City Federal Reserve President Esther George said on Monday that US interest rates were too low and signalled she could be ready to resume her push within the Fed's rate-setting committee for rate increases.
Lower rates tend to boost gold prices because they cut the opportunity cost of holding non-yielding bullion while weighing on the dollar, in which it the metal priced.
"Not too long ago, gold prices would have withered on prospects of higher stock prices, but not this time around; investors are thinking that the spate of monetary easing is likely to persist for some time to come, keeping both gold and equities fairly well supported," INTL FCStone said in a note.
The European Central Bank will not ease monetary policy any further at its meeting next week, according to an overwhelming majority of respondents in a Reuters poll of euro money market traders.
Silver was up 0.6 per cent at US$20.41 an ounce.
Platinum, which rose to a 13-month high of US$1,104.10 on Monday, fell for the first time in two weeks, down 0.1 per cent at US$1,099 an ounce.
Palladium was up 0.6 per cent at US$623.92 per ounce.