Gold slipped on Monday as the dollar strengthened against the yen, with the greenback buoyed by a smooth meeting between US President Donald Trump and Japanese Prime Minister Shinzo Abe that saw no mention of currency policy.
Spot gold had fallen 0.31 per cent to $1,230.22 (Dh4,514.90) per ounce by 0608 GMT, while US gold futures were down 0.36 per cent at $1,231.3.
The dollar briefly touched its highest since January 30 at 114.17 yen, with relief that Trump set aside his tough campaign rhetoric over security and jobs in a meeting with the Japanese Prime Minister over the weekend.
“Quietness on the protectionism front and a rekindling of the Trump-flation trade is taking the wind out of gold’s safe-haven sails,” said Jeffrey Halley, senior market analyst at OANDA.
A senior Japanese government spokesman said Abe and Trump did not discuss currency issues and that Trump did not request a bilateral trade deal.
The US currency also found broad support from comments by Trump on Thursday that he planned to announce an ambitious tax reform plan in the next few weeks, rekindling hopes for big tax cuts. The dollar index was firm at 100.820.
Spot gold may revisit its February 10 low of $1,221.02 per ounce, according to Reuters technical analyst Wang Tao.
However, political risk from elections in Europe and worries over Trump’s policies will maintain underlying safe-haven appetite for the metal, traders said.
“Prices are likely to recover again, even though there may be slight corrections,” said Hareesh V, research head at Geofin Comtrade Ltd.
“Global uncertainty from the US, Europe and on the Korean front will drive global prices high again as prices couldn’t break the December-low,” he added.
Interest rates
Gold has rallied nearly 10 per cent after touching its lowest in over 10 months, at $1,122.35 an ounce, in December, following the US Federal Reserve’s move to raise interest rates for the first time in a year.
North Korea said on Monday it had successfully test-fired a new type of medium- to long-range ballistic missile, claiming further advancement in a weapons programme it is pursuing in violation of United Nations resolutions.
Speculators raised their bullish wagers in COMEX gold to the highest in two months in the week to Feb. 7, US. Commodity Futures Trading Commission data showed on Friday.
In other precious metals, spot silver was mostly unchanged at $17.94 per ounce, after touching its highest since Nov. 11 at $18 earlier in the session.
Platinum eased by 0.8 per cent to $1,002.35 per ounce.
Palladium was down 0.5 per cent at $779.98 per ounce, after hitting $786.90, its strongest in over two weeks.
