Gold holds steady over N.Korea

Source:Reuters-Global Times Published: 2017/9/6 18:48:39

Dollar down against yen again on Fed comments

Gold held steady on Wednesday as heightened geopolitical risks over North Korea and concerns about low inflation in the US that could delay another rate hike lent some support.

Spot gold was nearly unchanged at $1,340.12 per ounce by 17:39, after touching its highest level since September 2016 in the previous session.

US gold futures for December delivery edged 0.10 percent lower to $1,343.10.

"We're being driven by headlines and a weaker dollar and not necessarily by fundamental reasons, so I'm a little cautious of these levels," said Jeffrey Halley, a senior market analyst at OANDA.

"I think headlines regarding the Korean Peninsula could cause short-term spikes but it wouldn't surprise me if gold ran out of a bit of momentum," Halley added.

A top North Korean diplomat on Tuesday warned that his country was ready to send "more gift packages" to the US as world powers struggle for a response to Pyongyang's latest nuclear weapons test.

The dollar on Wednesday edged down against the Japanese yen, getting closer to a recent four and a half month low, pressured by simmering tensions on the Korean Peninsula and on comments by a Federal Reserve official about low US inflation.

Fed policymakers signaled caution on weak inflation and a few backed delaying further interest rate hikes, media reports noted.

Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.

Spot gold may retest resistance at $1,345 per ounce, a break above which could lead to a gain to the next resistance at $1,350, said Reuters' technical analyst Wang Tao.

"The technical picture is extremely overbought. We could see a correction to the downside, possibly back almost towards the $1,300-1,310 level," OANDA's Halley said.

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