Gold price drops below $1,700 as equities rally

Spot gold declined 1.9% to $1,692.93 per ounce as of 11:30 a.m. EST. Gold futures were also down 2.1% to $1,691.90 per ounce on the Comex in New York.

“Generally markets are getting comfortable with the fact that even though the data is bad, things are likely to improve and that is taking the shine off gold,” Michael Hewson, Chief Market Analyst at CMC Markets UK, told Reuters.

However, analysts expect the weak economic backdrop to continue to provide support for gold, evident in the growing demand for gold-backed ETFs.

Holdings of SPDR Gold Trust — the world’s largest gold-backed ETF — rose 0.1% to 1,129.28 tonnes on Tuesday, their highest since April 2013.

“Despite the fall in bullion prices, gold is expected to remain supported on the back of the weaker dollar, protests on the streets of the United States, souring US-China relations and inflation worries because of widespread stimulus,” Hewson added.

In other metals, palladium eased 0.2% to $1,963.50 an ounce, while platinum fell 1.1% to $837.50. Silver dropped 2.9% to $17.56, having hit its highest since February on Monday.