Gold price slips as risk sentiment improves

BENGLURU, Aug 25 (Reuters): Gold prices fell on Tuesday as hopes surrounding a Covid-19 vaccine and positive signals on the US-China trade front buoyed risk sentiment and offset support for the metal from a weaker dollar.

Spot gold fell 0.5 per cent to $1,922.67 per ounce by 1003 GMT. US gold futures was down 0.5 per cent to $1,928.90 per ounce. "A stronger equity market is attracting investors more and that is erasing all the positive effects of a weaker dollar on gold," said Commerzbank analyst Eugen Weinberg.

European shares gained, with investor confidence boosted by Washington and Beijing stating they are both dedicated to their Phase One trade agreement, and some renewed hopes about the production of Covid-19 vaccines. Investors are now looking forward to see if the US Federal Reserve "will tolerate inflation and put economic growth over monetary," Commerzbank's Weinberg said.

Fed Chair Jerome Powell is due to speak at a gathering of central bankers in Jackson Hole, Wyoming, on Thursday, where he is expected to provide further clarity on the US central bank's efforts to revamp its approach to monetary policy.

"We've seen a pullback in gold since the beginning of the month around the sense that maybe the Fed is not going to do much in terms of expanding its policy tool kit," said DailyFx currency strategist Ilya Spivak.