Gold falls as investors kept a close watch on Korean peninsula
Gold fell as the dollar went up, but held near two-month highs as investors kept a close watch on tensions over the Korean peninsula. Spot gold was down 0.2 per cent at $1,286.39 per ounce after marking its highest since June 7 at $1,291.86 an ounce. U.S. gold futures for December delivery fell 0.12 per cent to $1,292.4 per ounce.
“Maybe geopolitical tensions are easing so it’s natural for gold to come down a bit …But it’s very unpredictable because prices could rise to another high because of some change,”
said Richard Xu, a fund manager at China’s biggest gold exchange-traded fund, HuaAn Gold.
“After the sharp sell off in the dollar, over the weekend nothing happened so I guess the threat from the (Korean) peninsula is low, but we think gold fundamentals are strong,”
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As tensions between the United States and North Korea increased, the dollar edged higher against the yen, trading above last week’s near four-month low. The dollar index was largely unchanged at 93.115.
“Although more aggressive rhetoric between the U.S. and North officials would temporarily boost gold prices, we see outright military action as unlikely and upward pressure on gold prices stemming from the confrontation as limited,”
John Davies, Global Commodities Strategist at BMI Research said in a note.
Gold is highly sensitive to rising interest rates, as this increase the opportunity cost of holding non-yielding bullion.
Spot gold faces a strong resistance at $1,291 per ounce, it may hover below this level or retrace to a support at $1,278, according to Reuters technical analyst Wang Tao.