Gold slips as risk-on trade returns to favor stocks

Gold futures pulled back on Wednesday as investors dipped a toe back in global stock markets and bid up the traditional riskier currencies, snubbing the haven metal as flaring worries about Italy-triggered instability for the European Union cooled a touch.

August gold fell $2.60, or 0.2%, to $1,301.50 an ounce. Prices based on the most-active contracts have drifted a hair above the closely watched $1,300 line, underpinned slightly by the Italy scenario, trade-talk uncertainty and North Korean diplomacy, after hitting a fresh low for 2018 earlier in May.

Italy’s stocks and bonds, as well as the euro, were all in recovery mode, and U.S. stock futures were taking part in the advance. Italy’s two biggest antiestablishment parties — the 5 Star Movement and the League — were again in talks to form a coalition government after an earlier agreement was effectively unwound by Italy’s president this week, according to reports on Wednesday.

The euro rose to $1.1597 from $1.1541 late Tuesday in New York, helping to send the ICE U.S. Dollar Index lower. Gold and the dollar often diverge, but they were both trending slightly lower Wednesday.

The yield on the 10-year Treasury note was around 2.84%. On Tuesday, the U.S. benchmark rate tumbled 16 basis points to 2.77%, in its largest one-day drop since the Brexit vote in June 2016.

On the economic front, ADP employment data for May is slated to be released at 8:15 a.m. Eastern Time, followed by revised first-quarter gross domestic product data and advance trade in goods for April at 8:30 a.m. Eastern.

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The Federal Reserve’s Beige Book is due for release at 2 p.m. Eastern, but no Fed officials are slated to deliver speeches on Wednesday.

In other trading, July silver gained 0.1% to $16.390 an ounce, while July copper  traded at $3.0485 a pound, down 0.5%. July platinum  fell 0.1% to $905.10 an ounce. September palladium rose 0.1% to $972.20 an ounce.

Among exchange-traded funds, the SPDR Gold Shares  fell 0.2%, as the iShares Silver Trust  slipped 0.1%. The VanEck Vectors Gold Miners ETF  was near even.