Gold price slips ahead of North Korea summit, expected Fed rate action

June 11, 2018

London (June 11)  Gold futures slipped Monday as a wait-and-see mood took over ahead of the much-touted meeting over North Korea’s nuclear power and two major central bank decisions on the docket this week.

August gold GCQ8, -0.18%  fell $3.70, or 0.3%, to $1,298.80 an ounce. The metal had managed a modest weekly return of about 0.3% last week after challenging the closely watched $1,300 line.

“Market participants are already looking ahead,” said Carsten Fritsch, analyst at Commerzbank, in a note. “Tomorrow will see U.S. President Donald Trump and North Korean leader Kim Jong Un meet in Singapore. If agreement were to be reached there, geopolitical risks in the region would probably decrease, resulting in less demand for gold as a safe haven.”

“The meetings of the Federal Reserve and European Central Bank will play a more important role for gold, however,” Fritsch said. “While there is every likelihood of the Fed raising interest rates again, the ECB may announce that it will be ending its expansionary monetary policy.”

Global trade issues remained in the fore, though fresh direct market impact was so far limited, after weekend tensions between Trump and Canadian Prime Minister Justin Trudeau, with Trump withdrawing his support for the Group of Seven communiqué after Trudeau criticized U.S. tariffs on Canadian metals.

Hostilities between Trump and the leaders of two close allies — Canada and France — had intensified ahead of the G-7meeting, and Trump and administration trade officials continued the spat on Monday.

 Trump is now in Singapore preparing for Tuesday’s much-anticipated meeting with North Korean leader Kim on Tuesday.

See: Trump will stand firm on denuclearization at North Korea summit, says Pompeo

As for interest-rate policy, the key driver of currency and gold levels, the Federal Reserve is expected to raise interest rates after its two-day meeting that begins Tuesday. European Central Bank policy makers are expected to announce the timing of a reduction of its crisis-era asset-purchase initiative when it meets on Thursday.

Don’t miss: Investors brace for week packed with Fed, ECB and North Korean drama

Ahead of those events, the ICE U.S. Dollar Index DXY, +0.09% a measure of the dollar against a half-dozen major currencies, traded 0.1% higher, dulling the appeal of dollar-priced gold, with the U.S. currency up nearly 4% so far this quarter, according to FactSet data.

Meanwhile, July silver SIN8, +0.47%  bucked gold’s move, trading up 0.3% to $16.785 an ounce. It logged a weekly rise of 1.8% as gold’s sister commodity, which also attracts industrial-use demand, handily outperformed its rival.

July copper HGN8, -1.44%  traded at $3.2555 a pound, down 1.4%. The contract grazed $3.30 at Friday’s finish, the highest settlement of the year so far for a most-active contract. It logged a sharp weekly rise of 6.5%.

Read Long-term bull run for copper could see prices top $10 a pound: analyst

July platinum PLN8, +0.06%  fell 0.2% to $904.30 an ounce. September palladium PAU8, +0.15%  rose 0.1% to $1,006.80 an ounce.


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