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Gold prices dip as dollar mounts a recovery

Published 04/19/2017, 01:49 PM
Updated 04/19/2017, 01:54 PM
© Reuters.  Gold prices pulled back from a five month high on Wednesday

© Reuters. Gold prices pulled back from a five month high on Wednesday

Investing.com - Gold prices fell on Wednesday, as demand for the precious metal eased, after the dollar bounced off session lows, despite ongoing geopolitical tensions over North Korea.

Gold for June delivery on the Comex division of the New York Mercantile Exchange dipped $12.10, or 0.94%, to $1,282.50 a troy ounce by 13:51 EDT.

Gold futures pulled back from near five-month highs earlier during the session, after the dollar mounted a recovery from heavy losses sustained in the previous session.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.28% to 99.69 by 13:51 EDT.

The dollar bounced off session lows, despite continued geopolitical tensions over North Korea and lower expectations of a June rate hike, after Treasury Secretary Steven Mnuchin admitted that the Trump administration no longer expects to complete tax reform, which is viewed as a pro-growth policy, by August.

According to Investing.com’s fed rate monitor tool, 40% of traders expect the Federal Reserve to hike interest rates in June, compared to 52.8% of traders in the previous week.

Gold is sensitive to moves in U.S. interest rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.

Meanwhile, geopolitical tensions persisted, after a North Korea official said on Monday, the Kim Jong Un led nation would continue to regularly test missiles.

Elsewhere, the British Parliament approved Prime Minister Theresa May’s call for an early election. UK opinion polls suggest PM May would comfortably increase her parliamentary majority in the general election.

Meanwhile, uncertainty surrounding the outcome of the French presidential elections underpinned gold prices, as investors braced for the outcome of the first round of French presidential elections, which is set to be held on April 23.

Silver futures traded at $18.160, a troy ounce while copper fell by 0.12% to $2.526.

Platinum lost 0.93% to $969.30 while Natural Gas rose by 1.81% to $3.200.

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