Gold steady on N. Korea tensions, French election

Gold held steady on Tuesday after touching five-month highs the previous session, bolstered by the dollar softening versus the yen, North Korea tensions and the French presidential election. US Vice President Mike Pence reassured Japan of American commitment to reining in North Korea’s nuclear and missile ambitions on Tuesday, after warning that US strikes in Syria and Afghanistan showed the strength of its resolve.
The dollar dipped fractionally versus the yen after US-Japan trade talks, giving back gains made earlier after US Treasury Secretary Steven Mnuchin told the Financial Times a strong dollar was a positive in the long term. A weaker dollar makes dollar-priced gold cheaper for non-US investors, and the precious metal, seen as a safe haven, also benefits from political uncertainty.
“Short-term risk is skewed to the downside, the market needs to correct but underlying support is there with the focus on political uncertainties. We see the yen continuing to strengthen,” Saxo Bank’s head of commodity strategy Ole Hansen said.
“Also expectations about the dollar are up for revision, the strong dollar story is fading. (US President Donald) Trump is talking it down and we are seeing weakness creep into US data, changing the perception of how much rates have to rise.”
Spot gold edged up 0.1 percent at $1,285.55 per ounce by 1126 GMT, after climbing to $1,295.42 in the prior session, its highest since Nov. 9. US gold futures dipped 0.3 percent at $1,287.90. Investors were nervous ahead of the first round of France’s presidential election this Sunday, even though an opinion poll put centrist Emmanuel Macron first in the first round of voting, just ahead of far-right, anti-euro candidate Marine Le Pen.
“Gold looks fairly attractive at the current juncture as a safe haven bet with geopolitical tensions on the rise and concerns ahead of French elections,” Sugandha Sachdeva, head of metals, energy and currency research at Religare Securities, said.
“The Indian festival of Akshay Tritiya (in late April) should provide a fillip to physical demand and thus the prices,” Sachdeva said, adding that gold was vulnerable to profit taking. 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 July 11, 2016, high of $1,374.71, Reuters technical analyst Wang Tao said. Spot silver edged down 0.1 percent to $18.38 per ounce, after hitting a five-month high of $18.649 in the prior session. Platinum rose 0.1 percent to $982.25 per ounce, while palladium rose 0.5 percent to $792.40.

Source: Arab News