Gold stuck below $1,300 on stronger equities, dollar

Singapore: Gold retained overnight losses to trade below $1,300 an ounce on Tuesday, as safe-haven demand for the metal was curbed by an apparent easing of tensions in Ukraine that boosted equities and the dollar.          

Fundamentals    

Spot gold was flat at $1,297.50 an ounce, after dropping 0.6 per cent in the previous session. US gold slipped 30 cents to $1,299. US and European stock prices surged on Monday, taking a leading US equities index to a 14-year high, as investors breathed easier over the Ukraine crisis and knocked oil prices to lows not seen in more than a year.     

Equity markets got a boost after Russian Foreign Minister Sergei Lavrov said all issues around a humanitarian convoy sent by Moscow to relieve needy areas of eastern Ukraine had been resolved. Moscow said it would like a ceasefire to allow aid to get to people trapped by the fighting.      

However, tensions remain high, with Ukraine saying that dozens of people, including women and children, were killed as they fled fighting in eastern Ukraine on Monday when their convoy of buses was hit by rocket fire. No progress has been made in talks between Russian and Ukrainian, German and French foreign ministers on a ceasefire or a political solution.

Meanwhile, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 2.09 tonnes to 797.69 tonnes on Monday - the first inflow in nearly four weeks. Silver was trading near a two-month low hit in the previous session, while palladium was not too far from a 13-year high hit on Monday.     

Palladium got a boost on fears over supply from top producer Russia and strong demand prospects.