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Gold prices dropped on Monday, and hovered around one-month lows hit last week, weighed down by a firm US dollar and as concerns over the Korean peninsula eased over the weekend.
Spot gold fell 0.3 per cent to $1,293.35 per ounce at 0418 GMT, not far from last week's near one-month low of $1,287.61. Prices for the yellow metal dropped about 1.7 per cent last week, posting their second consecutive weekly decline. US gold futures for December delivery were nearly unchanged at $1,297.10 per ounce.
Merkel's win
“Merkel's win in the German federal elections and a quiet news weekend on the North Korean front, saw the US dollar opening stronger and gold's weekend safe-haven premium eroded from Friday,” said Jeffrey Halley, senior market analyst, OANDA.
The dollar index was up 0.1 per cent at 92.255 against a basket of currencies. The euro slipped on Monday after German Chancellor Angela Merkel won a fourth term in a weekend election, but faced leading a much less stable coalition in a fractured parliament as support for the far-right party surged.
“I guess markets are relieved about the ongoing sanctions against North Korea. If you see what China and (US President Donald Trump) have done last week, it seems they are trying to achieve a peaceful resolution,” said OCBC analyst Barnabas Gan.
N. Korea tensions
On Sunday, the United States had said it has added North Korea to its list of countries that are banned from entering the country.
“The (US Federal Reserve) started its balance sheet reduction last week as well as still pricing in one time rate hike by year-end,” Gan noted.
Last week, the Fed had announced it would begin trimming down its $4.5 trillion in assets and signalled it will likely raise rates again this year.
“This still has a strong influence in pushing gold prices lower as well.”
Meanwhile, physical gold demand remained soft across Asia this week despite a downwards price correction as consumers awaited further dips in rates, while a government move to bring transparency to bullion trading kept buyers on the sidelines in India.
In other precious metals, silver slipped 0.2 per cent to $16.91 per ounce. Prices fell over 3.5 per cent last week, its biggest weekly decline since early July.
Platinum inched 0.1 per cent lower to $929.70 per ounce, but hovered around an eight-week low hit on Thursday. It posted its second consecutive weekly fall with a decline of 3.5 per cent last week. Palladium gained 0.5 per cent to $921.05 per ounce.
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