Gold slips as stocks gain post US presidential debate

Spot gold was down 0.2 per cent at $1,334.41 an ounce and US gold futures eased 0.5 per cent to $1,338.10 an ounce

Gold edged lower on Tuesday after equity markets bounced back, hinting that investors were turning to riskier assets in a belief Democrat Hillary Clinton won the first US presidential debate against Republican Donald Trump.

Asian shares recovered from an early bout of nerves while the Mexican peso surged on Tuesday. 

Markets have tended to see Clinton as the candidate of the status quo, while few are sure what a Trump presidency might mean for US foreign policy, trade and the domestic economy.

Spot gold was down 0.2 per cent at $1,334.41 an ounce by 0554 GMT. By falling on Tuesday, gold snapped a six-day winning streak.

US gold futures eased 0.5 per cent to $1,338.10 an ounce.

"Leading into this event (presidential debate), positioning in the gold market buying wasn't aggressive in either direction, it was fairly neutral. I suspect the move subsequent to the first debate is going to be relatively muted," said ANZ analyst Daniel Hynes.

However, the wave of risk-on trading as a consequence of the US Presidential election could weigh on gold prices in the short-term with a possible break to the upside amid heightened volatility, Hynes added.

Analysts said gold could be under pressure if Trump emerged as a winner in the November elections, as the dollar was likely to benefit from the Republican candidate's stance against low interest rates.

"In the long term, if Trump becomes US president, its effect on the dollar would be positive... Trump has always criticised the Fed for easing the monetary policy," said Jiang Shu, chief analyst at Shandong Gold Group.

Meanwhile, the dollar index, which weighs the greenback against a basket of other currencies, was up 0.1 per cent at 95.358, despite the dollar easing against the Mexican peso.

"The current $1,330-$1,342 range (for gold) is still in play and participants will be looking closely at the results of the first US presidential debate for direction," MKS PAMP Group trader Sam Laughlin said in a note earlier in the day.

Among other precious metals, silver edged 0.2 per cent higher to $19.44 an ounce after falling 1.2 per cent in the previous session, its biggest loss over two weeks.

Platinum was up 0.3 per cent at $1,039.49 after falling 1.4 per cent in the prior day.

Palladium gained 0.5 per cent to $696.58 per ounce. It was down 1 per cent on Monday, the biggest fall in two weeks.