Gold hovers at $1,300, aided by geopolitics

london — A slightly firmer dollar weighed on gold on Monday, while ongoing tensions over Iran and North Korea and recent weak US economic data lifted bullion above the psychological $1,300 level.

Spot gold was unchanged at $1,304.50 an ounce at 1000 GMT, while US gold futures for December delivery were up 0.2 per cent at $1,306.90 per ounce.

While the dollar index edged up on Monday as the euro dipped, recent weak US economic data and tame inflation point to a more favourable environment for gold. “Last Friday we had rather disappointing CPI number, which further enforced the view that there’s no need for the Fed to be very aggressive in terms of rate hikes,” said analyst Carsten Menke at Julius Baer in Zurich.

Rising interest rates tend to boost the dollar and push bond yields up, putting pressure on the greenback-denominated, non-yielding gold.

Geopolitical risks, including over Iran and North Korea, are likely to persist this week, Jeffrey Halley, a senior market analyst with OANDA, said in a note.

The euro extended losses after Catalan leader Carles Puigdemont failed to give a clear answer to whether or not he declared independence from Spain.

Spot gold may break a resistance at $1,305 per ounce and rise to the next resistance at $1,318, Reuters technical analyst Wang Tao said.