Gold steadies as dollar rises

london — Gold steadied on Wednesday, having hit a 9-1/2 month peak in the previous session after North Korea fired a ballistic missile over Japan, but it remained firmly above $1,300 with further near-term gains expected.

The dollar came off a 2-1/2 year low and world stocks rose after the measured US response to North Korea’s missile test allayed investors’ concerns, and they turned their attention instead to some positive economic data.

A stronger dollar also makes dollar-priced gold costlier for non-US investors. “Sentiment in the futures market has recently shifted from bearish to bullish and with the break of $1,300 we think this will continue for a while,” said Carsten Menke, analyst at Julius Baer.

However, he added: “Currencyrelated headwinds should return to gold this year, plus we don’t see strong investment demand. This puts the whole rally above $1,300 on a rather weak footing longer term.” Spot gold was flat at $1,309.76 per ounce at 1158 GMT. On Tuesday, the price jumped to $1,325.94, the highest since Donald Trump was elected US president, before closing flat.

US gold futures slipped 0.3 per cent to $1,315.20.

North Korea’s launch of a ballistic missile over Japan boosted gold on Tuesday, but the precious metal later gave back gains as the dollar recovered on strong US consumer confidence data.Fears the test could trigger an aggressive response receded on Wednesday after the United Nations — in a statement drafted by the United States — condemned North Korea’s missile launch but held back from threatening any new sanctions.

“Do we think that the geopolitical issue will intensify? No, we don’t, but we cannot rule it out either,” said Dominic Schnider at UBS Wealth Management in Hong Kong. “Looking at how things are spiralling, the risk is that these tensions linger on.”

Elsewhere, holdings of the largest gold-backed exchange-tradedfund (ETF), New York’s SPDR Gold Trust GLD, rose 0.25 per cent on Tuesday from Monday, data showed. Among other precious metals, silver rose 0.3 per cent to $17.40 per ounce, trading below its more than two-month peak of $17.67 touched on Tuesday.

Platinum was flat at $987.60 per ounce. In the previous session, the metal hit its highest since early March at $1,006.30. — Reuters