Gold steadies after two days of falls

Bengaluru — Gold prices steadied on Tuesday after two straight sessions of falls, but a strong dollar continued to weigh on the market amid renewed hope of a US-North Korean summit.

Spot gold was nearly unchanged at $1,297.31 an ounce at 3.54am GMT, while US gold futures for June delivery fell 0.5% to $1,296.90/oz.

“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 US,” ANZ analyst Daniel Hynes said.

“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 dollar-denominated gold more expensive for holders of other currencies and making nonyielding assets less appealing.

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 November 14, 2017.

“The 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 US President Donald Trump revived hope 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 US-North Korea summit.

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

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 is providing a little bit of support but is a minor factor at the moment,” Hynes said, referring to the developments in Italy.

In other precious metals, spot silver was down 0.1% at $16.45/oz.

Platinum rose 0.4% to $905/oz, while palladium fell 0.4% to $983.40/oz.

Reuters