Gold dips to 2-week low on growing recovery hopes

• Optimism about the development of coronavirus vaccines and a revival of business activity has lifted risk sentiment in the financial markets.
• Growing political unrest in Hong Kong over Beijing's proposed national security laws has kept investors on the edge.

Spot gold was down 0.4pc at $1,704.46 per ounce by 0916 GMT. U.S. gold futures fell 0.7pc to $1,693.90.

"It's very important for gold prices to stay above $1,700. Otherwise, if the price correction continues, speculative investors are likely to leave this boat and increase pressure on prices," said Commerzbank analyst Eugen Weinberg.

"One can mention the geopolitical tensions are contributing somewhat and supporting gold prices currently. But, until now this situation has failed to ignite fears on the equity market."

Optimism about the development of coronavirus vaccines and a revival of business activity has lifted risk sentiment in the financial markets.

After a batch of poor economic readings out the United States, data on Tuesday showed U.S. consumer confidence nudged up in May and new home sales beat expectations.

Despite the pullback in bullion prices, the outlook remains positive for gold, which is seen as a safe-haven asset during political and economic uncertainties, analysts said.

Risks for a temporary short-term gold market unwind to a low- to mid-$1,600 level seem to be rising, Citi said in a note, adding that they "remain outright bullish (on) gold over the medium term and forecast that $2,000 ounce will be breached in the next 12 months."

Growing political unrest in Hong Kong over Beijing's proposed national security laws has kept investors on the edge.

U.S. President Donald Trump said Washington was working on a strong response to China, adding it would be announced before the end of the week.

Elsewhere, palladium climbed 1.1pc to $1,978.16 per ounce, while platinum dipped 0.6pc to $824.65 and silver eased 0.2pc to $17.06.