Gold prices fell to a two-week low on Tuesday as markets became less concerned that far-right leader Marine Le Pen would win the French presidential election, increasing investor appetite for risky assets such as stocks while denting bullion.
Spot gold was down 0.9 percent at $1,264.25 an ounce by 2:53 pm EDT (1853 GMT), on track for its weakest one-day performance since March 2. It fell earlier to $1,261.41, the lowest since April 11. US gold futures settled down 0.8 percent at $1,267.20.
A gauge of world stocks notched a record for a second straight session, spurred by speculation about US tax reform and relief at French election results, while the 10-year US Treasury yield rallied to a two-week high. Business-friendly centrist Emmanuel Macron won the first round of the French vote on Sunday and opinion polls indicated less support for Le Pen.
"We've moved from having multiple numbers of positive drivers for gold last week when yields were on the defensive and we had multiple geopolitical risks," said Ole Hansen, head of commodity strategy at Saxo Bank. "But now with the French election (first round) behind us, there is a bit of a surge of risk-on coming back to the market. The main worry was a strong performance by Le Pen."
Gold is often seen as an alternative investment during times of political and financial uncertainty. Heightened security risks provided some support. North Korea conducted a live-fire exercise on Tuesday as a US submarine docked in South Korea in a show of force.
Holdings of SPDR Gold, the world's largest gold-backed exchange-traded fund, rose six tonnes in the past two sessions. Silver dipped 1.7 percent at $17.59 an ounce after touching a one-month low at $17.51. "Silver's fundamentals look to be price supportive, but overextended investor positioning poses downside risk near-term," said Standard Chartered in a note. Palladium was up 0.2 percent at $796.55 while platinum inched down 0.4 percent to $955.30 an ounce. Asset manager ETF Securities said in a note it expects "modest upside" for platinum given "expectations for continued global recovery in growth and manufacturing, and a record discount to the gold price."