Gold flat as Hong Kong concerns offset reopening optimism

Spot gold was unchanged at $1,711.93 per ounce by 1243 GMT

  
Image used for illustrative purpose. A one kilo gold bar is displayed in a shop in Dubai's gold souk, April 11, 2006.

Image used for illustrative purpose. A one kilo gold bar is displayed in a shop in Dubai's gold souk, April 11, 2006.

REUTERS/Tamara Abdul Hadi

Gold traded flat on Wednesday as concerns about the U.S. response to China's proposed security law for Hong Kong countered optimism about a re-opening of the global economy.

FUNDAMENTALS

* Spot gold was unchanged at $1,711.93 per ounce by 1243 GMT after a 1% drop on Tuesday. U.S. gold futures GCv1 were also flat, at $1,705.

* U.S. President Donald Trump said on Tuesday the United States was working on a strong response to China's planned national security legislation for Hong Kong and it would be announced before the end of the week. 

* Hong Kong's legislature was surrounded by riot police, as protests were expected on Wednesday over a bill criminalising disrespect of China's national anthem and against plans by Beijing to impose national security laws. 

* Asian shares shed some of their recent gains on concerns about rising Sino-U.S. tensions. 

* On Tuesday, the U.S. stock benchmark S&P 500 index broke through the psychologically-important 3,000 level, capping a 37% stock rally since its March low. 

* U.S. consumer confidence nudged up in May, suggesting the worst of the coronavirus-driven economic slump was likely in the past as the country starts to reopen. 

* The New York Stock Exchange opened on Tuesday for the first time in two months. 

* However, economic prospects for the developed world this year have darkened again in the past month, with a V-shaped sharp recovery expected by less than one-fifth of economists polled by Reuters. 

* Japan plans to include $302 billion in direct spending under a second extra budget to be compiled on Wednesday, the Mainichi newspaper reported. 

* The dollar index rose 0.2%, making gold more expensive for holders of other currencies.

* Palladium fell 1% to $1,936.99 per ounce and platinum slipped 0.5% to $825.62, while silver rose 0.2% to $17.13.

DATA/EVENTS (GMT) 0130 Australia Construction Work Done Q1 0645 France Consumer Confidence May

(Reporting by Harshith Aranya in Bengaluru; Editing by Subhranshu Sahu) ((harshith.aranya@thomsonreuters.com; Within U.S. +1 651 848 5832, Outside U.S. +91 80 6182 2599; Reuters Messaging: harshith.aranya.thomsonreuters.com@reuters.net))

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