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PRECIOUS-Gold falls on revived risk appetite after failed Turkey coup

Published 2016-07-18, 11:08 a/m
© Reuters.  PRECIOUS-Gold falls on revived risk appetite after failed Turkey coup
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* U.S. stocks hover near record highs

* Dollar rises 0.1 pct vs basket of currencies (Updates prices, adds comment)

By Clara Denina

LONDON, July 18 (Reuters) - Gold fell as much as one percent on Monday as European equities rose and investor jitters calmed following a failed coup attempt in Turkey.

Spot gold XAU= fell earlier to a session low of $1,323.43 an ounce and was down 0.5 percent at $1,331.12 by 1444 GMT. Bullion fell over 2 percent last week, its first weekly decline in seven weeks, as investors piled cash into riskier assets.

U.S. gold GCcv1 was up 0.3 percent at $1,334.70 an ounce.

Turkey widened a crackdown on suspected supporters of a failed military coup, taking the number of people rounded up in the armed forces and judiciary to 6,000. The government said it was in control of the country and economy. had turned higher immediately after news of Turkey's coup on Friday, as demand for assets perceived as safe, such as bullion and bonds, briefly spiked.

"Gold always shows to be a safe harbour during political instability or when wider markets are in turmoil," ActivTrades chief analyst Carlo Alberto De Case said.

"After the metal broke below support at $1,340 an ounce, a push lower is possible, as the situation in Turkey 'stabilised' and there are no new headlines on the Brexit saga."

Gold gained $100 in the two weeks following Britain's vote to leave the European Union, as worried investors started putting their cash into safe-haven assets, before falling back.

The dollar rose 0.1 percent against a basket of six currencies, the promise of central bank stimulus lent support to European equities and U.S. stock prices were higher. MKTS/GLOB

"On one side, more monetary stimulus around the world supports risk sentiment, but on the other side it makes commodities more attractive," ABN Amro analyst Georgette Boele said.

"Gold may have lost some safe haven demand because of that but expectations for a U.S. interest rates hike are now low and that's supportive."

Adding further pressure on bullion was positive U.S. retail sales data, which rose more than expected in June. Louis Fed President James Bullard said on Friday there are "upside" risks to his view that the U.S. central bank should raise interest rates just once this year and remain on hold in 2017 and 2018.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

Among other precious metals, spot silver XAG= was down 2.2 percent at $19.75 an ounce.

Platinum XPT= was down 0.8 percent at $1,077.10 an ounce, while palladium XPD= fell 2.2 percent to $632.22 an ounce.

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