* Dollar at 6-week high vs yen
* Investors await U.S. Fed statement Wednesday
* Silver at 3-month low, reaches technically oversold levels
(Updates prices; adds comment, second byline, NEW YORK
By Marcy Nicholson and Peter Hobson
NEW YORK/LONDON, May 2 Gold prices fell to a
three-week low on Tuesday, as demand for riskier assets drove
stocks higher and the dollar hit a six-week peak against the
"Risk appetite is back," said Societe Generale analyst Robin
Rising share prices increase the opportunity cost of holding
non-yielding bullion, while a stronger dollar
makes gold more expensive for holders of other currencies.
Spot gold was down 0.1 percent at $1,255.43 an ounce
by 2:28 p.m. EDT (1828 GMT), having earlier hit $1,251.37, the
lowest since April 10 and around the 200-day moving average.
U.S. gold futures settled up 0.1 percent.
"The moving averages tell us objectively that the long-term
trend is no longer bearish. However, gold is yet to break down
its long-term bearish trend line, which again held in early
April," said Fawad Razaqzada, technical analyst with Forex.com.
"As a result, we have seen a sharp unwinding of the long
positions that had been accumulated since December 2016 and
again in March."
Gold fell 0.9 percent on Monday after U.S. lawmakers agreed
on a spending package to avert a U.S. government shutdown and
the Nasdaq share index reached a record high.
Meanwhile, the market's so-called fear gauge, the VIX
volatility index , fell to its lowest since 2007 on
Monday. On Tuesday, world stock markets inched higher as
investors awaited the outcome of a two-day U.S. Federal Reserve
policy meeting to be announced at 2 p.m. EDT (1800 GMT) on
"If the Fed signals further rate increases and shrinking of
the balance sheet tomorrow and then we get a good jobs number on
Friday we should certainly end the week below $1,250, and maybe
closer to $1,240," said Societe Generale's Bhar.
Higher interest rates would cause U.S. bond yields to rise,
making non-yielding gold less attractive.
In other precious metals, silver was down 0.4 percent
at $16.78 an ounce, after touching $16.75, its lowest since Jan.
27. It has fallen for 11 out of the past 12 sessions, putting
the spot price on track for the most technically oversold level
on a 14-day relative strength index since November 2015.
Platinum was 0.03 percent lower at $924.70, after
falling to a four-month low at $919.
Palladium was down 0.2 percent at $813.25. The metal
used in the automotive industry for emission-controlling
catalytic converters is near a two-year high, but car sales are
too weak to sustain it, said Julius Baer analyst Carsten Menke.
(Additional reporting by Swati Verma in Bengaluru; Editing by
Marguerita Choy and Edmund Blair)