• Gold prices dropped on Monday and hovered around one-month lows hit last week, as the U.S. dollar firmed and concerns over the Korean peninsula eased.
Spot gold was down 0.4 percent at $1,291.60 per ounce as of 0646 GMT, not far from last week’s near one-month low of $1,287.61. Prices of the yellow metal dropped about 1.7 percent last week in their second consecutive weekly decline.
U.S. gold futures for December delivery slipped 0.2 percent to $1,295.00 per ounce.
• “(Angela) Merkel’s win in the German federal elections and a quiet news weekend on the North Korean front, saw the U.S. dollar opening stronger and gold’s weekend safe-haven premium eroded from Friday,” said Jeffrey Halley, a senior market analyst with OANDA.
• “I guess markets are relieved about the ongoing sanctions against North Korea. If you see what China and (U.S. President Donald) Trump have done last week, it seems they are trying to achieve a peaceful resolution,” said OCBC analyst Barnabas Gan.
“The U.S. Federal Reserve started its balance sheet reduction last week as well as still pricing in one-time rate hike by year-end,” Gan said.
“This still has a strong influence in pushing gold prices lower as well,” Gan said.
• Meanwhile, physical gold demand remained soft across Asia this week despite a downwards price correction as consumers awaited further dips in rates, while a government move to bring transparency to bullion trading kept buyers on the sidelines in India.
• In other precious metals, silver slipped 0.5 percent to $16.87 per ounce. Prices fell over 3.5 percent last week in the biggest weekly decline since early July.
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• Traders and analysts who make up the Wall Street survey collectively look for the metal to rise over the next week. They were also bullish each of the last two weeks only to see gold fall.
Still, they say they remain upbeat in part because gold is due for a corrective bounce after a sell-off since the September highs. There’s also that pesky North Korean geopolitical situation, and they doubt the dollar will maintain upward momentum despite a hawkishly construed Federal Open Market Committee this week, which sent gold back below $1,300 an ounce for the first time since August.
• Colin Cieszynski, chief market analyst in Canada for CMC Markets, is among those who is neutral on gold in the short term, calling for consolidation between $1,280 and $1,300.
• Grady described the market as technical at the moment with key chart resistance around $1,305. Important support points lie at the 50-day moving average that is right around Thursday’s $1,291.20 low, plus $1,286.80, which is a 50% retracement of the rally from the July low to the high earlier this month. “I think if it gets under that level, you’re going to see some strong technical selling,” Grady said.
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