Gold slips, but demand keeps prices above $1,300

Reuters
Bengaluru, Karnataka, India Published: May 25, 2018, 10:33 AM(IST)

File photo. Photograph:( Reuters )

Gold prices eased on Friday on profit-taking, after breaking above $1,300 in the previous session when US President Donald Trump's decision to call off a meeting with North Korean leader Kim Jong Un triggered safe-haven buying.

Spot gold was down 0.2 per cent at $1,302.18 per ounce at 0312 GMT, after gaining nearly 1 per cent in the previous session in its biggest one-day percentage rise since April 11. It remains on track for a weekly advance.

US gold futures for June delivery fell 0.2 per cent to $1,301.80 per ounce.

"It is normal for some profit-taking to ensue after a surge (in prices). Still, gold appears to be anchored in the $1,300-range, especially with the recent uptick in geopolitical tensions," said OCBC analyst Barnabas Gan.

"The sustained uncertainty over (US-North Korea) negotiations will likely add further upside to gold prices given safe-haven demand," Gan said.

Gold is often seen as a safe investment during times of political and financial uncertainty, alongside the Japanese yen.

The dollar regained its footing on Friday after dropping to a 2-week low versus the yen in the previous session, as North Korea said it was open to resolving issues with the United States after Trump on Thursday called off a summit with the North, citing Pyongyang's "open hostility".

A stronger dollar makes dollar-denominated gold more expensive for holders of other currencies.

The North's conciliatory remarks and commitment to US-North Korea talks had eased some concern about the crisis and pressured gold, said Helen Lau, an analyst at Argonaut Securities.

Meanwhile, Trump's threat to impose tariffs on auto imports drew strong criticism abroad and at home where US business groups and members of his own Republican Party warned of damage to the industry and raised the prospect of a global trade war that would harm American interests.

Elsewhere, eurozone growth could slow further and uncertainty is on the rise but the bloc's expansion remains solid and broad-based, European Central Bank policymakers concluded in April, the minutes of the meeting showed on Thursday.

Among other precious metals, silver fell 0.3 per cent to $16.57 an ounce, while platinum edged down 0.1 per cent to $908.50 an ounce after touching its highest since May 14 at $914.30 in the previous session.

Palladium climbed about 0.2 per cent to $976.10 an ounce.

All three of those metals were on course for weekly gains.

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