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PRECIOUS-Gold drops to more than two-week low as dollar, equities gain
Published at 21/05/2019 at 14:25

* Dip below $1,266 could trigger further gold decline -analyst

* Fed minutes due on Wednesday

* Dollar index near one-month high

(Updates prices)

By Brijesh Patel

May 21 (Reuters) - Gold prices slipped to a more than two-week low on Tuesday, as the dollar strengthened and improved risk appetite took the sheen off bullion ahead of the release of minutes from the U.S. Federal Reserve's latest policy meeting.

Spot gold was down 0.4% at $1,272.42 per ounce as of 1315 GMT, having touched its lowest since May 3 at $1,270.09.

U.S. gold futures also fell 0.4%, to $1,272.00 an ounce.

"Right now the only safe haven out there seems to be the dollar, which has been moving higher against most currencies," said Saxo Bank commodity strategist Ole Hansen.

"Also, there has been a slight improvement in the outlook for the stock markets after the U.S. decided to provide Huawei with a 90-day reprieve."

Both factors were weighing on gold, he added.

The dollar index rose to its strongest in nearly a month, boosted by higher U.S. yields and as fears of the economic fallout from the U.S-China trade row prompted investors to choose the safety of the U.S. currency over bullion.

This pointed to a repeat of a similar trend last year when the dollar emerged as the go-to hedge against the simmering trade war, stemming flows into gold.

Stocks markets, meanwhile, gained after Washington temporarily eased trade restrictions imposed on Chinese telecom equipment maker Huawei Technologies .

On Monday the U.S. Commerce Department granted Huawei a licence to buy U.S. goods until Aug. 19 to maintain existing telecoms networks and provide software updates to Huawei smartphones.

Markets now await Wednesday's release of minutes from the U.S. central bank's May 1 meeting, looking for insights on future interest rates.

Fed Chair Jerome Powell said on Monday that it was premature to ascertain the impact of trade and tariffs on the trajectory of monetary policy, instead pointing to recent healthy economic data.

"From a technical point of view, a first positive signal (for gold) would be a recovery to $1,290, while a fall below the recent low of $1,266 could open space for a further decline," said ActivTrades analyst Carlo Alberto De Casa.

Among other precious metals, silver was down 0.2% at $14.44 an ounce, closing in on the more than five-month low of $14.33 touched in the previous session.

Platinum fell 0.9% to $804.60 and palladium eased by 0.1% to $1,327.65.

(Reporting by Brijesh Patel in Bengaluru Editing by David Goodman and Susan Fenton)

((Brijesh.Patel1@thomsonreuters.com; Within U.S. +1 651 848 5832, Outside U.S. +91 8067493865; Reuters Messaging: Brijesh.Patel1.thomsonreuters.com@reuters.net))