Gold steady on safe haven demand

london — Gold held steady on Tuesday after touching fivemonth highs the previous session, bolstered by the dollar softening versus the yen, North Korea tensions and the French presidential election.

US Vice-President Mike Pence reassured Japan of American commitment to reining in North Korea’s nuclear and missile ambitions on Tuesday, after warning that US strikes in Syria and Afghanistan showed the strength of its resolve.

The dollar dipped fractionally versus the yen after US-Japan trade talks, giving back gains made earlier after US Treasury Secretary Steven Mnuchin told the Financial Times a strong dollar was a positive in the long term.

A weaker dollar makes dollar-priced gold cheaper for non-US investors, and the precious metal, seen as a safe haven, also benefits from political uncertainty.

“Short-term risk is skewed to downside, the market needs to correct but underlying support is there with the focus on political uncertainties. We see the yen continuing to strengthen,” Saxo Bank’s head of commodity strategy Ole Hansen said.

“Also expectations about the dollar are up for revision, the strong dollar story is fading. [US president Donald] Trump is talking it down and we’re seeing weakness creep into US data, changing the perception of how much rates have to rise.”

Spot gold edged up 0.1 per cent at $1,285.55 per ounce by 1126 GMT, after climbing to $1,295.42 in the prior session, its highest since November 9.

US gold futures dipped 0.3 per cent at $1,287.90.

Investors were nervous ahead of the first round of France’s presidential this Sunday, even though an opinion poll put centrist Emmanuel Macron first in the first round of voting, just ahead of farright, anti-euro candidate Marine Le Pen. — Reuters