Gold prices firm as North Korea worries offer support
Spot gold was mostly unchanged at $1,283.96 per ounce by 8.16 IST, after climbing to $1,295.42 in the prior session, its highest since 9 November
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Bengaluru: Gold held steady on Tuesday supported by geopolitical tensions over North Korea and after falling from a five-month high in the previous session on a firmer dollar.
Spot gold was mostly unchanged at $1,283.96 per ounce by 8.16 IST (0246 GMT), after climbing to $1,295.42 in the prior session, its highest since 9 November.
US gold futures were down 0.5% at $1,285.50.
The dispute over North Korea’s nuclear and missile programme remained taut as US vice-president Mike Pence arrived in South Korea. He warned North Korea on Monday that recent American military strikes in Syria and Afghanistan showed President Donald Trump’s resolve should not be questioned, but Pyongyang vowed to continue missile and nuclear tests.
“Gold looks fairly attractive at the current juncture as a safe haven bet with geopolitical tensions on a rise and concerns ahead of French elections,” said Sugandha Sachdeva, head of metals, energy & currency research at Religare Securities.
“The Indian festival of Akshay Tritiya (in late April) should provide a fillip to physical demand and thus the prices,” Sachdeva said, adding that the metal, however, was vulnerable to profit taking.
With the first round of France’s presidential election on 23 April, an unpredictable outcome is pushing some pollsters to calculate the most extreme runoff scenarios after Trump’s surprising US presidential win in November and Britain’s unexpected exit from the European Union in July.
“This weekend’s French Presidential first round elections are looking increasingly murky, and this will most likely fan safe-haven fires,” said Jeffrey Halley, senior market analyst at OANDA.
“It will be news headlines and opinion polls that would drive gold’s short-term direction.”
The dollar edged higher after US treasury secretary said he saw the currency’s strength over the long-term as a positive, although he agreed with Trump’s view that it hurts exports in the short-term.
“Trump’s penchant for a slightly weaker dollar and a gradual rise in rates is indicative of more legs to the recent rally in gold,” Sachdeva of Religare Securities said.
A stronger greenback makes dollar-denominated gold more expensive for buyers paying in other currencies while a slower pace of interest rate gains would help maintain demand for non-interest bearing gold.
Spot gold may break a support at $1,281 per ounce and fall to the next support at $1,265, following its failure to break a trendline falling from the 11 July 2016 high of $1,374.71, Reuters technical analyst Wang Tao said.
Spot silver edged up 0.1% to $18.40 per ounce, after hitting over a five month high of $18.649 in the prior session.
Platinum rose 0.3% to $982.50 per ounce, while palladium dropped 0.3% to $785.95. Reuters