Gold price edges off 8-week low as Comey firing weighs on risk appetite

New York (May 10)  Gold edged off the previous day's eight-week low on Wednesday as U.S. President Trump's abrupt firing of FBI chief James Comey hit share markets, but expectations of further U.S. interest rate hikes capped gains by the metal.

 

European stocks retreated from 21-month highs and the dollar initially slipped on concerns that Trump's dismissal of his FBI chief could make it harder for him to push through his tax reform plans.

 

Spot gold was up 0.2 percent at $1,223.30 an ounce at 0935 GMT, while U.S. gold futures for June delivery were up $7.20 an ounce at $1,223.30.

 

The metal slipped sharply in last week as concerns about this month's French elections and North Korea's nuclear programme faded, slipping to its lowest since mid-March at $1,213.81 on Tuesday.

 

In addition to jitters over the Comey firing, rekindled fears that North Korea could be gearing up for another weapons test fed into risk aversion in the broader markets, taking some pressure off gold.

 

"The unpredictability of both Trump and North Korea has been a reminder that geo-risk has not disappeared but temporarily gone into hibernation," Saxo Bank's head of commodity research Ole Hansen said.

 

"Initially (the Comey sacking) has had only a limited impact but it highlights that there are other drivers out there," he said. "It can turn on a plate if one of the two escalates, especially North Korea."

 

Trump attributed his decision to sack Comey, who had been leading an investigation into the Trump campaign's possible collusion with Russia during the 2016 election, to the FBI chief's handling of an investigation into presidential nominee Hillary Clinton's emails.

Source: Reuters