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Gold prices fall as investors turn to risk assets

Gold prices tread lower on Wednesday as the US dollar steadied, with investors awaiting minutes from the US Federal Reserve's last meeting in July for clues on the pace of potential interest rate hikes.

[BENGALURU] Gold prices fell on Thursday as the dollar inched up from multi-month lows and as signs that the US economy was strengthening turned investor focus on to risk assets.

Spot gold fell 0.5 per cent to US$1,260.36 per ounce as of 0729 GMT after touching US$1,258.20 earlier in the session, its lowest in almost one week.

US gold futures for December delivery fell 0.9 per cent to US$1,266.30 per ounce.

Wall Street's Dow Jones Industrial Average broke the 22,000-barrier for the first time in its 121-year history, and is on track for a sixth straight record close. It has risen 11 per cent in 2017.

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The dollar, meanwhile, inched away from a 15-month low versus a basket of currencies on Thursday.

"There's still ongoing optimism in the global market with the Dow Jones Industrial Average at record highs," said OCBC analyst Barnabas Gan.

"I think the global economic strength we've seen, especially from the US numbers and the very strong equity prints last night, were much more dominant in influencing (gold) prices than (the ongoing) geopolitical concerns." US inflation has been contained even as the country's labour market appears to be in its best shape in many years, with the jobless rate staying near a 17-year low.

On Wednesday, a report by a private payrolls processor showed that US private employers added 178,000 jobs in July, below economists' expectations, although payroll gains in June were revised up to 191,000 from an originally reported 158,000 increase.

"I think the markets are actually looking more closely at the revised June figures in the ADP jobs data more than the lower-than-expected July numbers," OCBC's Mr Gan said.

Gold's safe haven appeal is dampened when an economy shows signs of strengthening, making investors turn towards riskier assets such as equities.

Global demand for gold fell 14 per cent in the first half of this year due mainly to a sharp decline in purchases by exchange traded funds, the World Gold Council said.

Spot gold may retest a support at US$1,258 per ounce, a break below which could cause a loss to the next support at US$1,247, according to Reuters technical analyst, Wang Tao.

Silver slipped 0.7 per cent to US$16.43 per ounce after hitting its lowest in more than one week earlier in the day.

Platinum fell 0.2 per cent to US$940.50 per ounce after rising to its highest since June 14 in the previous session.

Palladium was 0.6 per cent lower at US$889.50 per ounce, on track to break a nine-session gaining streak.