LONDON, May 21 (Agencies): Gold marked a new low for the year on Monday after U.S. Treasury Secretary Steven Mnuchin declared that a trade war between China and the United States was "on hold", sparking a rally in stocks and the dollar.
Buoyancy in U.S. Treasury yields also weighed on appetite for non-interest bearing assets such as bullion, analysts said.
Spot gold fell to its lowest since late December at $1,281.76 an ounce, and by 0935 GMT was down 0.5 per cent at $1,284.70 an ounce. U.S. gold futures for June delivery were 0.6 per cent lower at $1,283.80.
Meanwhile, the gold price in Hong Kong went down 8 Hong Kong dollars to open at 12,080 dollars (about 1,538.85 U.S. dollars) per tael on Monday, according to the Chinese Gold and Silver Exchange Society.
"The dollar's riding high, and the 10-year yield has broken above 3.05 per cent for the first time since 2011," Mitsubishi analyst Jonathan Butler said. "This is taking place at a time when we're very close to all-time highs in the U.S. equity markets, and all of this positive news about jobs, about productivity, is feeding into a move towards risky assets."
He said gold could benefit from safe-haven buying in the long run if that exuberance loses steam and inflation pressures mount. But he added: "It's possible that we might see a further correction in the very short term. That will of course depend on the newsflow, and whether the dollar can hold onto its gains."
Gold prices fell below the psychologically important level of $1,300 an ounce last week, and posted the first weekly close below their 200-day moving average since late December.
A stronger dollar makes assets priced in the U.S. currency more expensive for holders of other currencies, while a bounce in yields had added to pressure on gold.
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