Gold slides amid global stimulus hopes
Gold slid over 1.5 per cent on Tuesday, backing off the $US1,700 ceiling hit in the previous session, as expectations of global policy measures to alleviate the economic impact from the coronavirus eased some investors' concerns and lifted share markets.
Spot gold lost 1.6 per cent to $US1,653.33 an ounce. US gold futures settled down 0.9 per cent at $US1,660.30.
"With the volatility that we had in the US equity markets in the past few days, we are seeing some people lightening up on gold a little bit," said Michael Matousek, head trader at US Global Investors.
"When you are trying to keep a proper allocation across your investments, you need to sell a little bit of gold and buy a little bit of S&P and that's what you're seeing right now. People are rebalancing portfolios."
Bullion rose as much as 1.7 per cent on Monday to its highest since December 2012 at $US1,702.56 after a rout in global equity markets and crashing crude oil prices.
Oil and global equity markets recovered on Tuesday as signs of coordinated policy easing to avert a global recession soothed traders.
US President Donald Trump vowed to take "major" steps to bolster the economy, and Japan unveiled a second package of measures worth about $US4 billion to cope with fallout from the virus outbreak.
The US central bank, having delivered an emergency rate cut last week, is expected to cut rates again at its next meeting on March 18.
The European Central Bank is under pressure to help bolster economic growth. It meets on Thursday.
US Treasury yields rose from all-time lows, and the dollar also rebounded after major losses, further pressuring gold prices.
"It could be that Tuesday's rebounds in the equities markets could be the so-called 'dead-cat bounce' that occurs after major market sell-offs, only to see prices continue to trend down," Kitco Metals senior analyst Jim Wyckoff said in a note.
"The general public's fear of Covid-19 appears to be continuing to grow."
The spectre of the coronavirus remained in the background with over 114,300 people infected globally.
Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose to 30.99 million ounces, its highest since October 2016.
In other precious metals, palladium fell 3 per cent to $US2,414.82 an ounce, silver declined 0.3 per cent to $US16.92 and platinum rose 0.8 per cent to $US869.34.