* Asia shares near 2-year high
* Dollar hits 1-month high vs yen
* FOMC starts policy meeting later on Tuesday
(Adds comment, updates prices)
By Swati Verma
BENGALURU, May 2 Gold on Tuesday held near
three-week lows hit in the previous session on diminishing
demand for safe-haven bullion as equities rallied and the U.S.
dollar gained versus the yen.
Spot gold was mostly unchanged at $1,255.90 per
ounce, as of 0733 GMT. Bullion prices on Monday dropped 0.9
percent to $1,253.66 an ounce, its weakest since April 11.
U.S. gold futures were up 0.1 percent at $1,256.70
Asian shares rose to near two-year highs on Tuesday and the
dollar hit a one-month high against the yen as U.S. Treasury
Firmer equities discourage the buying of non-interest-paying
bullion, which is priced in dollars.
"Gold is just shy of important daily support today in the
shape of its 200-day moving average at $1,253. A daily close
below here would be a bearish technical development," said
Jeffrey Halley, senior market analyst, OANDA.
"The fall (on Monday) implies that the safe haven bid that
has underpinned gold in recent times is rapidly eroding."
U.S. President Donald Trump seemed to take some of the
urgency out of geopolitical worries on Monday when he said he
was open to meeting North Korean leader Kim Jong Un in the right
circumstances. But that was followed on Tuesday by Pyongyang
saying a U.S. bomber training drill had brought the Korean
peninsula to the brink of nuclear war.
"The geopolitical concerns are receding but there are still
chances of them coming back again. Gold will retrace but it will
stay range bound for a while, before taking up any direction,"
said Richard Xu, a fund manager at China's biggest gold
exchange-traded fund, HuaAn Gold.
Also, the U.S. Federal Reserve starts a two-day policy
meeting later in the day, and investors may be waiting for any
direction from there.
"We don't see any new changes for the interest rate hike,
which may be good for the non-interest bearing gold," said Mark
To, head of research at Hong Kong's Wing Fung Financial Group.
Interest rate futures are still showing a roughly 70 percent
chance the Fed will raise rates in June, according to CME's
"We see gold dropping to around $1,240 over the course of
May, but still see a recovery back close to the old highs given
geopolitical tensions and an expected weaker dollar on account
of continuing gridlock in Washington," said INTL FCStone analyst
Spot silver gained 0.4 percent to $16.91 an ounce.
Silver fell 2 percent to $16.78 an ounce on Monday, levels last
seen on March 10.
Platinum was 0.5 percent higher at $929.50, after
falling to a four-month low at $923 in the previous session.
Palladium fell about 0.2 percent at $812.88.
(Reporting by Swati Verma in Bengaluru; Editing by Richard
Pullin and Tom Hogue)