Dollar recovery pushes gold down from 1-year high

NEW YORK/LONDON — Gold prices fell more than 1% on Monday from the previous session’s 13-month high as relief that North Korea did not conduct a missile test over the weekend helped to lift global stocks, the US dollar and bond yields.

Demand for safer assets like gold also weakened after hurricane Irma wreaked less damage in Florida than had been feared.

Spot gold was down 1.20% at $1,330.24 an ounce by 1:54 p.m. EDT (1754 GMT), on track for its biggest one-day drop since July 3. On Friday it touched $1,357.54, the highest since August last year.

US gold futures for December delivery settled down 1.20% at $1,335.70.

Gold had rallied 1.60% last week on fears of a North Korean missile launch and the impact of Irma on the US economy, helping to drive the dollar to its weakest since January 2015 and US bond yields to 10-month lows.

“Both of these events failed to materialize in a major way,” said Saxo Bank analyst Ole Hansen.

“The short- term stage has been set for some consolidation ( in gold prices). Much depends on where the dollar and bonds decide to go.”

The dollar strengthened on Monday, making gold more expensive for holders of other currencies, potentially reducing demand, while higher bond yields increase the opportunity cost of non-yielding bullion.

“It looks like speculators who had established positions to take advantage of a possible rise in risk aversion, were left disappointed as North Korea did not conduct another missile test at the weekend,” said Fawad Razaqzada, technical analyst for Forex.com.

“From a technical stand point, gold’s weakness also makes sense, but so far it can only be interpreted as a mere pullback from overbought levels, rather than trend reversal.”

North Korea on Monday warned the United States it would pay a “due price” for efforts to impose fresh sanctions on Pyongyang.

In the week to Sept. 5, hedge funds and money managers raised their net long position in COMEX gold futures and options to the highest in nearly a year.

Silver fell 0.80% to $17.78 an ounce from Friday’s five-month-high $18.21, platinum was down 1.50% at $ 989.24, while palladium was 0.10% lower at $935.75. —