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Gold Steady After Two Sessions of Fall; Strong Dollar Weighs on Market

"There seems to be a lack of conviction in the market, particularly after the North Korean summit... and that's come at a time when we are looking at another rate hike in the U.S.," said ANZ analyst Daniel Hynes.

Reuters

Updated:May 29, 2018, 10:09 AM IST
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Gold Steady After Two Sessions of Fall; Strong Dollar Weighs on Market
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Bengaluru: Gold prices steadied on Tuesday after two straight sessions of fall, but a strong dollar continued to weigh on the market amid renewed hopes of a U.S.- North Korean summit.

Spot gold was nearly unchanged at $1,297.31 per ounce at 0354 GMT, while U.S. gold futures for June delivery fell 0.5 percent to $1,296.90 per ounce.

"There seems to be a lack of conviction in the market, particularly after the North Korean summit... and that's come at a time when we are looking at another rate hike in the U.S.," said ANZ analyst Daniel Hynes.

"At the moment investors are sitting on the sidelines and are not really confident enough to put on any aggressive positioning."

Higher interest rates tend to boost the dollar, making greenback-denominated gold more expensive for holders of other currencies and denting its non-yielding appeal.

The dollar, which measures the greenback against a basket of six major currencies, stood at 94.333 after hitting a peak of 94.496 on Monday, its highest since Nov. 14, 2017.

"The yellow metal will look to consolidate above $1,300 to resume a push higher, while down-side support sits around $1,295," MKS trader Samuel Laughlin said in a note.

Gold prices eased from the $1,307.80 level hit on Friday as the dollar strengthened and U.S. President Donald Trump revived hopes of a summit with North Korean leader Kim Jong-un, after pulling out of the meeting last week.

On Monday, Trump and Japanese Prime Minister Shinzo Abe discussed North Korea by phone and confirmed they would meet before an expected U.S.-North Korea summit.

South Korean President Moon Jae-in said there could be more impromptu talks and summits with North Korea's Kim Jong Un.

Meanwhile, Italy's president set the country on a path to fresh elections on Monday, appointing a former International Monetary Fund official as interim prime minister with the task of planning for snap polls and passing the next budget.

"That (Italy concerns) is providing a little bit of support but is a minor factor at the moment," Hynes said.

In other precious metals, spot silver was down 0.1 percent at $16.45 an ounce.

Platinum rose 0.4 percent to $905 an ounce, while palladium fell 0.4 percent to $983.40 an ounce.

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