May 27, 2020 / 9:52 AM / 2 months ago

PRECIOUS-Gold dips to two-week low on recovery hopes

    * Gold will breach $2,000/oz in next 12 months - Citi 
    * For an interactive graphic tracking the global coronavirus
spread, open tmsnrt.rs/3aIRuz7 in an external browser

 (Updates prices)
    By Brijesh Patel
    May 27 (Reuters) - Gold dropped to its lowest in two-weeks
on Wednesday as hopes of quick economic recovery drove investors
towards riskier assets, although U.S.-China tensions over Hong
Kong put a floor under bullion prices.
    Spot gold        was down 0.6% at $1,700.30 per ounce by
1223 GMT. U.S. gold futures         fell 0.8% to $1,691.80.
    "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 from 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
times of political and economic uncertainty, analysts said.
    The risks of a temporary short-term gold market unwind to a
low- to mid-$1,600 level seems to be rising, Citi said in a
note, adding it remained "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 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        eased 0.1% to $1,954.75 per
ounce, silver        fell 0.3% to $17.05 and platinum        was
steady at $839.74.

 (Reporting by Brijesh Patel in Bengaluru; editing by Pritha
Sarkar and Barbara Lewis)
  
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