* Dip below $1,266 could trigger further decline -analyst
* Fed minutes due on Wednesday
* Dollar index near one-month high
(New throughout, updates prices, market activity, comments)
By Brijesh Patel
May 21 (Reuters) - Gold prices dropped on Tuesday to the lowest in
more than two weeks, as the dollar strengthened along with equities
and other riskier assets ahead of the U.S. Federal Reserve's release
of minutes from its latest meeting.
Spot gold fell 0.3% to $1,273.70 per ounce as of 2:24 p.m. EDT
(1824 GMT). The session low of $1,268.97 was its lowest since May 3.
U.S. gold futures settled down 0.3% at $1,273.20.
"What we are seeing, in a strange way, money is flowing
towards the dollar as a safe-haven," said Bart Melek, head of
commodity strategies at TD Securities in Toronto.
"Also, we have little bit of risk appetite on the stock
futures, so less of a reason to go into gold as a hedge," he added.
International equities markets strengthened after the United
States temporarily relaxed curbs on China's Huawei Technologies,
easing worries about further escalation of the U.S.-China trade war.
The dollar index climbed to its highest in nearly a month,
supported by the U.S.-China trade war and higher U.S. Treasury yields.
"Precious metals prices have come under pressure across the
complex as trade tensions have heightened, the U.S. dollar has
strengthened and U.S. Treasury yields have edged higher,"
Standard Chartered analysts said in a note.
"Gold prices have tumbled to test the lows for the month
ahead of the FOMC May meeting minutes due on 22 May. Our economists
expect the minutes to emphasize patience and data-dependency."
The Fed minutes are expected to provide insights into the May 1
central bank meeting in which policymakers decided to keep interest
rates steady and signaled little appetite to adjust them any time soon.
On Monday, Fed Chair Jerome Powell said it was premature to
ascertain the impact of trade and tariffs on monetary policy.
"From a technical point of view, a first positive signal (for
gold) would be a recovery to $1,290, while a fall below the recent low
of $1,266 could open space for a further decline," said
ActivTrades analyst Carlo Alberto De Casa.
Among other precious metals, silver fell 0.2% to $14.43 per ounce.
Platinum fell 0.1% to $811 per ounce after touching a
three-month low of $801.50 earlier, while palladium fell 0.7% to
$1,320.01 per ounce.
(Reporting by Brijesh Patel and Swati Verma in Bengaluru Editing by
Marguerita Choy and David Gregorio)
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