Gold price dips as dollar keeps its gains, but geopolitical tensions support the metal

March 29, 2018

London (Mar 29)  Gold prices dipped on Thursday as the dollar held its strong gains from the previous session, but simmering tensions over Russia and a potential trade war offered support.

Spot gold dropped 1.5% on Wednesday, the biggest one-day percentage decline since July 3 2017, after robust US data lifted the dollar, which steadied at those strong levels on Thursday.

Spot gold had slipped 0.1% to $1,323.51 an ounce by 11.06am GMT, after hitting a low of $1,322.50 earlier in the session, its lowest since March 21. US gold futures for April delivery were down 0.02% at $1,324 an ounce.

"I don’t see gold falling much further from here given the continued geopolitical tensions," said Carsten Fritsch, commodity analyst at Commerzbank in Frankfurt. "There was an easing of tensions in the Far East regarding North Korea, but there’s still tension between the West and Russia ... this can boil over again and support gold."

North and South Korea will hold their first summit in more than a decade on April 27, South Korean officials said on Thursday, after North Korean leader Kim Jong-un pledged his commitment to de-nuclearisation as tensions ease between the old foes. But Moscow has threatened to take retaliatory action after the US and other Western countries expelled more than 100 Russian diplomats over the poisoning of Russian former double-agent Sergei Skripal and his daughter in England with a military-grade nerve toxin.

Concerns about a global trade war have eased but that does not mean it is over, said Brian Lan, MD at dealer GoldSilver Central in Singapore.

Gold, often seen as an alternative investment during times of political and financial uncertainty, was on track for a third straight quarter of gains, having risen nearly 2% so far.

In other precious metals, spot silver dipped 0.1% to $16.24 an ounce after falling to $16.20, its lowest in one week. Silver was on track to post its worst quarter in three.

Platinum rose 0.5% to $935.80 an ounce, after hitting a near three-month low in the previous session. The metal was down about 5% so far this month, on course to post its worst month since September.

Palladium, up 0.3% to $969.10 an ounce, was set to fall more than 7% this month, the steepest drop since December 2016. For the quarter, the metal is down more than 8% so far, its worst since the quarter ended December 2015.


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