Gold slipped on Wednesday as the dollar recovered a bit from a three-week low hit in the previous session, but geopolitical concerns about North Korea and nervousness ahead of the French presidential election lent support to the safe-haven asset.
Spot gold was down 0.2 percent to $1,286.40 per ounce as of 0314 GMT. The metal hit its highest since early November at $1,295.42 on Monday before closing lower, and rose 0.4 percent on Tuesday.
U.S. gold futures were down 0.4 percent at $1,288.80.
U.S. Vice President Mike Pence on Tuesday reassured Japan of American commitment to reining in North Korea’s nuclear and missile ambitions, after warning that U.S. strikes in Syria and Afghanistan showed the strength of its resolve.
“The whole situation for gold is more than optimistic because of the geopolitical tensions aroused by North Korea and with the interest rate hike expectations coming down,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
“The trading range from $1,200-$1,250 over the past few weeks has been broken convincingly… We see $1,280 as the gravity around which the trading range will be built and prices will move between $1,270-$1,310.”
The dollar index edged up, but was hovering near a three-week low on disappointing U.S. housing starts data and nervousness over trade talks between the United States and Japan.
In France, investors remained nervous ahead of the first round of the country’s presidential election this Sunday, even though an opinion poll put centrist Emmanuel Macron first, just ahead of far-right, anti-euro candidate Marine Le Pen.
“Nervousness heading into the French election should theoretically provide some support to gold, but at some point, we think the markets will start to discount a poor showing for Le Pen and perhaps siphon off some of the risk premium already baked into prices,” said INTL FCStone analyst Edward Meir.
“However, offsetting this somewhat, is the possibility that the dollar will continue to recede on a Le Pen defeat, coupled with the fact that U.S. tax reform and infrastructure spending both seem to be increasingly far removed, painting a rather bullish backdrop for gold.”
British Prime Minister Theresa May’s call for a snap general election added to a lengthening list of uncertainties for investors already on edge over geopolitical tensions that also include Syria, Afghanistan, Turkey and U.S. relations with Russia and China.
Spot silver dropped 0.2 percent to $18.21 per ounce.
Platinum fell 0.1 percent to $972.45, while palladium was down 0.3 percent at $772. Palladium on Tuesday fell nearly 2 percent to a more than four-week low of $769.80.
Source: Reuters
