Gold prices fell on Tuesday due to expectations of rising US interest rates and improving sentiment for global economic growth, which mean investors are likely to favour risk assets such as equities. Bullion prices came off their lows as the US dollar turned negative against a basket of six major currencies. Spot gold was down 0.4 percent at $1,188.30 an ounce by 2:22 p.m. EST (1922 GMT), from a session low at $1,180.85. US gold futures settled down 0.2 percent at $1,187.90.
The US Federal Reserve is widely expected to raise rates in December, which could boost the US currency, making commodities more expensive for non-US buyers. The dollar hit an almost 14-year peak last week. "Gold is struggling here with the higher dollar and better sentiment for growth," said Danske Bank analyst Jens Pederson.
"Rising bond yields means it's cheaper to buy US Treasuries, which, like gold, are viewed as a risk-free asset." However, government bonds, unlike gold, earn interest. Expectations of stronger growth after US President-elect Donald Trump takes office in January have also helped equity markets since the election earlier this month.
"After the election people are thinking we're going to get a few more years of growth and stronger equities," said Andrew Cole, a fund manager at Pictet Asset Management. "Gold's losses are not surprising given the dollar." Analysts said doubts about whether Italian Prime Minister Matteo Renzi will win a referendum on Sunday on constitutional reform have not, as some had expected, countered negative sentiment toward gold.
But the Italian vote and Austria's presidential election also on Sunday cannot be ignored. On the technical front, traders say a break of a Fibonacci support level at $1,171.76 last week means gold could see lower levels over coming weeks.
Spot palladium rose by as much as 1.4 percent to $766.20 an ounce, the highest since June 2015. It was on track to close November up 23 percent, the biggest monthly gain since February 2008 "The white metal is likely to retain near-term support and hence we raise our short-term trading range to $650-$810 an ounce from $575-$720/oz previously," said UBS Wealth Management Research in a note.
"Mine supply is forecast to be flat this year and next, while demand in autocatalysts should expand at a solid pace, likely making 2017 the sixth consecutive deficit year." Silver up 0.12 percent at $16.65 an ounce, while platinum lost 0.7 percent at $916.60.
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