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Gold hits 2-week low as dollar eclipses metal's safe-haven appeal


GOLD prices fell to a more than two-week trough on Monday as strong US economic data underpinned the dollar, boosting its safe-haven status over gold amid political and trade tensions.

Spot gold was broadly unchanged at US$1,276.83 per ounce as of 0731 GMT, having fallen to US$1,274.39, its lowest since May 3, earlier in the session. US gold futures edged 0.1 per cent higher at US$1,276.50 an ounce.

US consumer sentiment jumped to a 15-year high in early May amid growing confidence over the economy's outlook, data showed on Friday.

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The dollar index was slightly higher, having booked its biggest weekly rise since early March last week supported by concerns about European parliamentary elections.

Rekindled Sino-US trade tensions have also seen the dollar mimicking its characteristics from last year when it was preferred over gold as a safe-haven hedge.

"The safe-haven demand of the US dollar is taking some of the gloss off gold's safety," said Michael McCarthy, chief market strategist, CMC Markets.

"It is a tough time all around for gold with the break below US$1,290 also pressuring it. In the absence of safe-haven demand, I would expect to see ongoing modest pressure on gold prices."

OANDA analyst Jeffrey Halley said in a note: "For gold, US$1,265 is now a critical support that must hold. A daily close below that region implies a much deeper correction could be imminent."

Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.4 per cent to 736.17 tonnes on Friday.

Hedge funds and money managers also raised their net long positions in COMEX gold in the week to May 14, the US Commodity Futures Trading Commission (CFTC) said on Friday.

"We suspect some of the these new longs must have gotten shredded over the past two sessions," INTL FCStone analyst Edward Meir said in a note.

Among other precious metals, silver was steady at US$14.42 an ounce, having earlier matched a more than five-month low from the previous session at US$14.35.

Platinum gained nearly 1 per cent to US$821.45, having fallen to US$812.50, its lowest since March 11, in the previous session. REUTERS