NEW YORK/LONDON (Reuters) - Gold fell 1 percent on Wednesday as the dollar and stocks gained, though tensions over North Korea and upcoming French and UK elections underpinned demand in the safe-haven asset.
Spot gold XAU= fell as low as $1,275.73 per ounce, and was last trading down 0.8 percent at $1,279.54 by 3:24 p.m. EDT (1924 GMT).
U.S. gold futures GCcv1 settled down 0.8 percent at $1,283.40.
“The 10-year Treasury yield at 2.2 percent is in positive territory ... keeping some pressure on the price of gold,” said Walter Pehowich, executive vice president in charge of precious metals investments services for Dillon Gage Metals.
“It appears that large fund selling in the Far East overnight is also putting pressure on the price of gold, and this move has kept the Wall Street gold traders guarding their long positions.”
The firm U.S. dollar .DXY also pressured gold prices, analysts said.
A stronger greenback makes dollar-denominated assets such as gold more expensive for holders of other currencies.
A run of disappointing U.S. economic data and doubts the Trump administration will progress with tax cuts have quelled expectations of faster inflation, while the Federal Reserve said in its Beige Book that the U.S. economy expanded at a modest-to-moderate pace between mid-February and the end of March.
While declines in energy shares weighed on U.S. stocks, gold’s losses were capped by uncertainties over elections and geopolitical tensions.
U.S. Vice President Mike Pence said Washington would work with its allies and China to put economic and diplomatic pressure on North Korea.
“Investors are still using gold for insurance and defensive positioning because there are concerns over equity valuations and politics,” said ETF Securities analyst Martin Arnold.
In France, investors remained nervous ahead of the first round of the presidential election on Sunday. A closely watched poll showed the first round of voting was too close to call, although centrist Emmanuel Macron remained favourite to win.
“Everyone is following the French election closely this weekend, as the outcome may have a significant impact on the price of gold in the coming months,” Pehowich said.
“If Marine Le Pen gets into a runoff, which appears likely, she could win and initiate France’s exit from the EU.”
British Prime Minister Theresa May’s call for a snap general election added to a list of uncertainties for investors.
Spot silver XAG= dropped 0.6 percent to $18.14 per ounce.
Platinum XPT= fell 1.1 percent to $962.99, while palladium XPD= was up 0.2 percent at $776.
Additional reporting By Nallur Sethuraman in Bengaluru; Editing by Elaine Hardcastle and Meredith Mazzilli