Gold slips as green­back strength­ens and US Trea­sury yields in­crease

Business World - - WORLD MARKETS -

NEW YORK/LON­DON — Gold fell 1% on Wed­nes­day as the dol­lar and stocks gained, though ten­sions over North Korea and up­com­ing French and UK elec­tions un­der­pinned de­mand in the safe haven as­set.

Spot gold fell up to $1,275.73 per ounce and was last trad­ing down 0.80% at $1,279.54 by 3:24 p.m. EDT (1924 GMT). US gold fu­tures set­tled down 0.80% at $1,283.40.

“The 10-year Trea­sury yield at 2.20% is in pos­i­tive ter­ri­tory… keep­ing some pres­sure on the price of gold,” said Wal­ter Pe­howich, ex­ec­u­tive vice-pres­i­dent in charge of pre­cious me­tals in­vest­ments ser­vices for Dil­lon Gage Me­tals.

“It ap­pears that large fund sell­ing in the Far East overnight is also putting pres­sure on the price of gold, and this move has kept the Wall Street gold traders guard­ing their long po­si­tions.”

The firm US dol­lar also pres­sured gold prices, an­a­lysts said.

A stronger green­back makes dol­lar-de­nom­i­nated as­sets such as gold more ex­pen­sive for hold­ers of other cur­ren­cies.

A run of dis­ap­point­ing US eco­nomic data and doubts the Trump ad­min­is­tra­tion will progress with tax cuts have quelled ex­pec­ta­tions of faster in­fla­tion, while the Fed­eral Re­serve said in its Beige Book that the US econ­omy ex­panded at a mod­est-to-mod­er­ate pace be­tween mid-Fe­bru­ary and the end of March.

While de­clines in en­ergy shares weighed on US stocks, gold’s losses were capped by un­cer­tain­ties over elec­tions and geopo­lit­i­cal ten­sions.

US Vice-Pres­i­dent Mike Pence said Wash­ing­ton would work with its al­lies and China to put eco­nomic and diplo­matic pres­sure on North Korea.

“In­vestors are still us­ing gold for in­sur­ance and de­fen­sive po­si­tion­ing be­cause there are con­cerns over eq­uity val­u­a­tions and pol­i­tics,” said ETF Se­cu­ri­ties an­a­lyst Martin Arnold.

In France, in­vestors re­mained ner­vous ahead of the first round of the pres­i­den­tial elec­tion on Sun­day. A closely watched poll showed the first round of vot­ing was too close to call, al­though cen­trist Em­manuel Macron re­mained fa­vorite to win.

“Every­one is fol­low­ing the French elec­tion closely this week­end, as the out­come may have a sig­nif­i­cant im­pact on the price of gold in the com­ing months,” Mr. Pe­howich said. “If Marine Le Pen gets into a runoff, which ap­pears likely, she could win and ini­ti­ate France’s exit from the EU.”

Bri­tish Prime Min­is­ter Theresa May’s call for a snap gen­eral elec­tion added to a list of un­cer­tain­ties for in­vestors.

Among other pre­cious me­tals, spot sil­ver dropped 0.60% to $18.14 per ounce, plat­inum fell 1.10% to $962.99, while pal­la­dium was up 0.20% at $776. —

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