LONDON, May 21 (Reuters) - Gold marked a new low for the
year on Monday after U.S. Treasury Secretary Steven Mnuchin's
declaration that a trade war between China and the United States
was "on hold" helped boost appetite for higher risk assets such
as 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 1205 GMT was down 0.5 percent at
$1,285.17 an ounce. U.S. gold futures         for June delivery
were 0.5 percent lower at $1,284.50.
    "The dollar's riding high, and the 10-year yield has broken
above 3.05 percent 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.
    The metal is also being weighed down by expectations that
U.S. Federal Reserve will lift U.S. interest rates again next
month, further hurting demand for non-yielding assets. 
    Naeem Aslam, chief market analyst at Think Markets, said
investors were now looking ahead to this week's meeting of the
Federal Open Market Committee, which sets rates. "If the Fed
doesn't tame its hawkish stance, we would expect more weakness
in the gold price," he said.
    Hedge funds and money managers cut their net long position
in COMEX gold contracts by 21,294 contracts to 31,327 in the
week to May 15, data showed on Friday.                 
    Among other precious metals, platinum        was down 0.2
percent at $881 an ounce, after also marking a fresh low for the
year in earlier trade at $873.50.
    Silver        was down 0.2 percent at $16.39 an ounce, while
palladium       , the most industrial of the major precious
metals, was up 1.2 percent at $974.70 an ounce, bucking the
falling trend.
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