Gold hits 5-month peak on rising geopolitical worries

Gold hits 5-month peak on rising geopolitical worries

Gold hits 5-month peak on rising geopolitical worries

Gold held steady on Tuesday supported by geopolitical tensions over North Korea and after falling from a five-month high in the previous session on a firmer dollar. Stress in North Korea, as well as Syria and the recent bombing in Afghanistan have been credited with gold's rise.

A weaker dollar makes dollar-priced gold cheaper for non-U.S. investors.

Gold will extend its rally as the dollar weakens, future US interest rate increases are already priced in and equity markets decline amid mounting geopolitical risk, according to Prestige Economics.

The yellow metal gave up some gains as the USA dollar rebounded against the yen from a five-month low of 108.11 hit earlier in the day.

Phillip Streible, senior commodities broker for RJO Futures in Chicago, said gold prices also pared gains on profit taking.

After hitting a five-month high at $1,290.60 an ounce of June Comex gold, the yellow metal ended the USA day session modestly down at $1,286.20 an ounce.

In France, investors remained nervous ahead of the first round of the presidential election on Sunday.

Meanwhile, uncertainties over Trump's policy toward North Korea have been growing.

Adding to these concerns, the U.S. military last week dropped the largest non-nuclear device it has ever used in combat on a network of caves and tunnels used by Islamic State in eastern Afghanistan.

May silver SIK7, -0.07% fell 8 cents, or 0.4%, at $18.195 an ounce.

June gold GCM7, -0.63% fell $10.70, or 0.8%, to $1,283.60 an ounce. The spike in demand for mini gold bar largely comes from it being cheaper and easier to carry compared to commonly traded 1-kilogram gold bar, which costs around 54 million won ($47,285) nowadays.

The dollar index, which tracks the greenback against a basket of six rival currencies, edged up 0.2% to 99.62, pulling away from Tuesday's low of 99.36, its deepest trough since March 28. "The 10-year Treasury yield at 2.2 percent is in positive territory ... keeping some pressure on the price of gold", said Walter Pehowich, executive vice president in charge of precious metals investments services for Dillon Gage Metals. Platinum rose 0.3 per cent to $976, while palladium was down 0.3 per cent at $772.55.

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