Gold prices get trimmed to below $1,700 an ounce, with investor attention turning to the bounce back in US stocks. Image Credit: Pexels

London: Gold fell for a third day as a drumbeat of moves toward reopening economies plus gains in stocks eroded appetite for safe havens, with prices sinking below $1,700 an ounce ahead of policy announcements from two of the world's leading central banks.

The precious metal eased after US equities hit the highest in almost seven weeks as US states Florida took steps toward easing restrictions. Italy, one of the countries hit hardest, prepared to begin reopening, although the World Health Organization warned the coronavirus pandemic is far from over.

While bullion is still near the highest in more than seven years amid the outbreak, investors are questioning if there's scope for further gains given the restarts. At the same time, they're tracking the stimulus by governments and central banks to aid growth, with the Federal Reserve and the European Central Bank to make policy announcements on Wednesday and Thursday.

But just don't rule out gold completely

While bullion saw some pressure from strength in stocks, "the demand destruction due to COVID-19 cannot be overstated, volatility in financial markets remains elevated and precious metals, especially gold, remain a good hedge," said Avtar Sandu, senior manager for commodities at broker Phillip Futures Pte. Moreover, the rebound of activity may be pushed back, he said.

Spot gold fell as much as 1 per cent to $1,696.87 an ounce and traded at $1,697.12 at 11:37am in Singapore. Prices - which rallied to $1,747.36 on April 14, the highest since 2012 - lost a combined 1 per cent over Monday and Friday.

The drop in prices came after worldwide holdings in bullion-backed exchange-traded funds eased on Monday following 25 days' of net inflows, according to data compiled by Bloomberg.

"The risk sentiment continues to improve as more and more economies make plans to gradually reopen businesses," said Howie Lee, an economist at Oversea-Chinese Banking Corp. "The Fed and ECB are expected to have little market-moving announcements this week.

"It will be premature to think the worst is over, though, and for that reason I think gold prices may continue to see support."