Gold falls as greenback strengthens, North Korea concerns abate
GOLD prices dropped on Monday, and hovered around one-month lows hit last week, weighed down by a firm US dollar and as concerns over the Korean peninsula eased over the weekend.
Spot gold fell 0.30% to $1,293.35 per ounce at 0418 GMT, not far from last week’s near onemonth low of $1,287.61. Prices for the yellow metal dropped about 1.70% last week, posting their second consecutive weekly decline.
US gold futures for December delivery were nearly unchanged at $1,297.10 per ounce.
“Merkel’s win in the German federal elections and a quiet news weekend on the North Korean front, saw the US dollar opening stronger and gold’s weekend safehaven premium eroded from Friday,” said Jeffrey Halley, senior market analyst, OANDA.
The dollar index was up 0.10% at 92.255 against a basket of currencies, while the euro slipped on Monday after German Chancellor Angela Merkel won a fourth term in a weekend election, but faced leading a much less stable coalition in a fractured parliament as support for the far- right party surged.
“I guess markets are relieved about the ongoing sanctions against North Korea. If you see what China and ( US President Donald Trump) have done last week, it seems they are trying to achieve a peaceful resolution,” said OCBC analyst Barnabas Gan.
On Sunday, the United States said it has added North Korea to its list of countries that are banned from entering the country.
“The ( US Federal Reserve) started its balance sheet reduction last week as well as still pricing in one time rate hike by yearend,” Mr. Gan noted.
Last week, the Fed announced it would begin trimming down its $ 4.50 trillion in assets and signaled it will likely raise rates again this year.
“This still has a strong influence in pushing gold prices lower as well.”
Meanwhile, physical gold demand remained soft across Asia this week despite a downwards price correction as consumers awaited further dips in rates, while a government move to bring transparency to bullion trading kept buyers on the sidelines in India.
Among other precious metals, silver slipped 0.20% to $16.91 per ounce, while platinum inched 0.10% lower to $929.70 per ounce, hovering around an eight-week low hit on Thursday last week.
Palladium increased by about 0.50% to $ 921.05 per ounce.