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PRECIOUS-Gold nears 5-month top on weak dollar, geopolitical tensions
April 18, 2017 / 10:52 AM / 3 months ago

PRECIOUS-Gold nears 5-month top on weak dollar, geopolitical tensions

3 Min Read

    * Gold rises within $3/oz of Monday's 5-month high
    * Dollar index drops to 3-week low
    * U.S. 10-year Treasury yields at 5-month trough

 (Recasts with updates prices; adds comment, second byline, NEW
YORK dateline)
    By Marcy Nicholson and Maytaal Angel
    NEW YORK/LONDON, April 18 (Reuters) - Gold turned higher on
Tuesday, nearing the prior session's five-month peak, bolstered
by a softer dollar, lower U.S. Treasury yields, North Korea
tensions and nervousness ahead of the French presidential
election.
    The dollar index        fell to a three-week low on
disappointing U.S. housing starts data and nerves over trade
talks between the United States and Japan, while Britain's pound
soared after Prime Minister Theresa May called for a snap
general election.       
    May's call added to a lengthening list of uncertainties for
investors already on edge over geopolitical tensions that also
include Syria, Afghanistan, Turkey and U.S. relations with
Russia and China.             
    "Short-term risk is skewed to the downside but underlying
support is there with the focus on political uncertainties. We
see the yen continuing to strengthen, and a strong yen and
strong gold have gone hand-in-hand since November," 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. (U.S. President Donald) Trump is
talking it down and we're seeing weakness creep into U.S. data,
changing the perception of how much rates have to rise."
    A weaker dollar makes dollar-priced gold cheaper for
non-U.S. investors. U.S. 10-year Treasury yields fell to a
five-month low, also a source of support for gold prices.
    Spot gold        turned up 0.6 percent to $1,291.98 an ounce
by 3:12 p.m. EDT (1912 GMT), just below the prior session's peak
at $1,295.42, its highest since Nov. 9.
    U.S. gold futures         settled up 0.2 percent at
$1,294.10.
    In France, investors remained nervous ahead of the first
round of the country's presidential election this Sunday, even
though an opinion poll put centrist Emmanuel Macron first, just
ahead of far-right, anti-euro candidate Marine Le Pen. 
    "Investors appear very reluctant to part with gold," said
Julius Baer in a note. 
    Ryan McKay, associate commodities strategist for TD
Securities in Toronto, said he does not expect gold prices to
extend gains much above $1,300.
    "The Fed is still probably on course to hike two more times
this year," McKay said.
    "Until something fundamentally happens to change the Fed
expectations or something happens with North Korea or the likes
of that, we think it's capped at this $1,290-$1,300 resistance."
    Spot silver        fell 0.3 percent to $18.32 per ounce,
while platinum turned down 0.2 percent to $977.60 per ounce.
Spot palladium fell 2.1 percent to $771.80, having hit its
lowest since March 17 earlier at $769.80.

 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Pritha Sarkar and Lisa Shumaker)
  

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