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Gold eases as equities rally, Hong Kong woes limit losses

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05/26/2020 | 08:30am EDT
FILE PHOTO: A 1000 gram gold bar is seen at the Kazakhstan's National Bank vault in Almaty

By Brijesh Patel

Gold prices edged lower on Tuesday as hopes of economic recovery lifted share markets with many countries easing coronavirus-driven lockdowns, although Sino-U.S. tensions over Hong Kong limited bullion's losses.

Spot gold was down 0.2% at $1,725.25 per ounce by 1046 GMT. U.S. gold futures fell 0.6% to $1,724.60.

"We are seeing U.S. stocks breaking key levels to the upside, so that is adding bit of selling pressure to gold which has otherwise been supported by the recent geopolitical worries related to Hong Kong," said Saxo Bank analyst Ole Hansen.

"Right now, there is no key driver as such for gold and that basically raises the risk of a correction or renewed period of consolidation."

European shares hovered near an 11-week high, while U.S. stock futures rose 2% and breached a major chart barrier as businesses worldwide gradually reopened following a months-long lockdown. [MKTS/GLOB]

However, offering some respite to gold were brewing trade tensions between the United States and China over a new security law to be enforced in Hong Kong.

White House National Security Adviser Robert O'Brien warned that the proposed legislation could lead to U.S. sanctions on Hong Kong and China, and threaten the city's status as a financial hub.

Gold is often used as a safe store of value during times of political and financial uncertainty.

"On the technical side, only a clear recovery of $1,750 would open space for further rallies, while a decline below $1,725 would increase the likelihood of another test of $1,700 and potentially down to $1,671-$1,675," ActivTrades chief analyst Carlo Alberto De Casa said in a note.

Market participants are waiting for the U.S. consumer confidence report due at 1400 GMT.

Elsewhere, palladium dropped 2% to $1,950.97 per ounce and platinum fell 0.4% to $835.31, while silver jumped 0.8% to $17.33.

(Reporting by Brijesh Patel in Bengaluru; Editing by Kirsten Donovan)

Stocks mentioned in the article
ChangeLast1st jan.
AMP LIMITED -2.28% 1.715 End-of-day quote.-10.44%
CASA INC. -3.99% 1058 End-of-day quote.-24.70%
GOLD -0.30% 1798.3 Delayed Quote.18.89%
HUB CO., LTD. -2.86% 577 End-of-day quote.-44.63%
PALLADIUM 0.92% 1974.5 Delayed Quote.0.88%
SILVER 0.21% 18.7095 Delayed Quote.4.77%
THE LEAD CO., INC. -1.71% 345 End-of-day quote.-11.54%
THE PLATINUM GROUP -1.30% 3.04 End-of-day quote.-25.49%
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