PRECIOUS-Gold prices dip as rallying stocks boost risk appetite
* Spot gold hovering near 100-day moving average
* Speculators cut net short position in week to Oct. 16
* Palladium hits highest in nearly 9 months (Updates prices, adds comment)By Sumita LayekBENGALURU, Oct 22 (Reuters) - Gold fell on Monday as risingstock markets pointed to improved investor appetite for risk,with a slightly firmer dollar also sapping bullion's appeal. Spot gold was down 0.2 percent at $1,223.05 an ounceat 1302 GMT, having hit a 2-1/2-month peak last week at$1,233.26 per ounce. U.S. gold futures fell 0.2 percentat $1,226.90 an ounce.Despite the market gathering a fair amount of technicalmomentum last week, breaking free of stock market fluctuations,
some analysts said the outlook was not straightforward.
"The fundamental outlook for gold is still looking a littlebleak despite the recent recovery, so I would not be surprisedif gold was to falter from here," said Fawad Razaqzada, ananalyst with Forex.com."(We have) a slightly stronger dollar and positive sentimentin the stock markets - both of those factors are weighing."European shares gained ground after Moody's kept Italy'ssovereign rating intact, with the market also taking cues fromrallies in Asia after China's promise to provide stimulus tostabilise its economy and offset the impact of U.S.tariffs.Gold prices were still hovering around the 100-day movingaverage near $1,224, a key technical level, analysts said.
"We are still in a lateral phase between $1,220 and $1,230.I wouldn't be worried about the low correction this morning aslong as it is keeping positive momentum,"ActivTrades chiefanalyst Carlo Alberto De Casa said.Geopolitical concerns, including tensions between SaudiArabia and the West over the killing of journalist JamalKhashoggi, and developments related to Brexit were seen keepingsome investors favourably disposed towards gold. "We saw a significant amount of short covering fromspeculators last week. With quite a bit of uncertainty, we couldsee that trend moving forward," ING analyst Warren Pattersonsaid."Maybe the market was surprised with how much short coveringthere was and that has taken the steam out of the (recent gold)rally."Gold speculators cut their net short position in COMEX goldcontracts by 65,637 contracts to 37,372 contracts, the smallestsince late July, in the week to Oct. 16, data showed. Among other precious metals, silver was down 0.2percent at $14.57 per ounce, while platinum was up 0.1percent at $831.1.Palladium climbed 2.3 percent to $1,104.8 per ounce,having touched its highest since Jan. 25 earlier in the sessionat $1,106.90.
The autocatalyst metal has seen fresh buying on the back ofa recovery in Chinese equity markets, said Walter Pehowich,executive vice president of investment services at Dillon GageMetals. Industrial commodities tend to benefit from sharperappetite for risk.
(Reporting by Sumita Layek and Karthika Suresh Namboothiri inBengaluru; Editing by Emelia Sithole-Matarise and Jan Harvey)
 |