LONDON (Reuters) - Gold prices bounced off a seven week low on Monday as safe haven demand ebbed away following pro-EU candidate Emmanuel Macron’s victory in the French presidential election.
Spot gold was up 0.2 percent to $1,230 per ounce at 1410 GMT, after touching 1,224.86 earlier, its lowest since March 17. The precious metal, seen as a safe haven, fell 3.2 percent last week, its biggest percentage fall in 25 weeks as polls indicated a landslide for Macron.
U.S. gold futures rose 0.5 percent to $1,233 an ounce.
“The result of (the French) election was pretty well forecast ... Last week we had some sizeable (long) liquidation in gold and physical demand remains pretty good right now ... I‘m not surprised to see gold supported around current levels,” ICBC Standard Bank analyst Tom Kendall said.
The removal of the political risk associated with Macron’s rival Marine Le Pen - who had vowed to take France out of the euro - leaves investors refocusing on the pace of monetary policy normalisation in Europe and the United States.
The European Central Bank is expected to have more room to tighten policy as the euro zone’s economic recovery gathers pace.
In the United States, data out on Friday showed job growth rebounded sharply in April and the unemployment rate dropped to near a 10-year low, which is seen as reinforcing the case for a U.S. interest rate hike next month.
Higher rates dent demand for non-interest bearing gold. At the same time, a stronger dollar makes dollar-priced gold costlier for non-U.S. investors.
“Expectation for a hike is there so it’s about the tone the Federal Reserve (takes). I‘m mildly bearish for the remainder of this quarter, I wouldn’t be surprised to see (gold) test $1,200-$1,180,” Kendall said.
Gold has fallen more than 5 percent since hitting a five-month high of $1,295.42 in mid-April.
Hedge funds and other money managers cut their net-long position in COMEX gold for the first time in seven weeks in the week to May 2, while they reduced their bullish stance in silver to the lowest since January, U.S. government data showed on Friday.
Spot silver dipped 0.2 percent to $16.30 an ounce.
Platinum was 0.2 percent higher at $938.85 an ounce, and palladium was 0.2 percent higher at $812.
Additional reporting by Swati Verma in Bengaluru; Editing by Jane Merriman and Mark Potter