Gold Continues Fall Amid Easing North Korea Tensions

By Marina Force Features Dow Jones Newswires

Gold prices slid Tuesday for a second-straight day, as investors shifted toward riskier assets amid easing tensions between the U.S. and North Korea.

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The precious metal fell 0.55% to $1,274.80 a troy ounce in midmorning trade in London.

Copper prices, meanwhile, edged up 0.17% to $6,415 a metric ton.

After days of escalating rhetoric between the U.S. and North Korean leaders, Pyongyang's state media reported Tuesday that Kim Jong Un decided not to launch a threatened missile attack on Guam.

As geopolitical tensions subsided, investors regained some risk appetite, said Commerzbank in a morning note. Global equities continued to rebound from their late-week slide on Tuesday, though investors were debating how far that rally had to run.

"Equities showed a momentum on Monday with investors moving away from defensive assets, but the situation between the U.S. and North Korea is still hostile," said Nitesh Shah, a commodity strategist at ETF Securities.

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Also weighing on gold was the climb in the dollar. The greenback advanced for a second day after comments from Federal Reserve Bank of New York chief William Dudley boosted expectations for an interest-rate increase this year.

The WSJ Dollar Index, which measures the greenback against a basket of other currencies, was up 0.28% to 86.50. A stronger dollar typically weighs on gold because it makes the dollar-denominated commodity more expensive for holders of other currencies.

"In the absence of anything going on between the U.S. and North Korea, I would expect gold prices to fall down to $1,230 by the end of the year, as a result of [the Federal Reserve] tightening interest rates," Mr. Shah said.

Looking ahead, investors were continuing to monitor for further remarks from U.S. and North Korean administrations and looking to minutes from the Federal Open Market Committee minutes, due out Wednesday, that may hold clues to the Federal Reserve's next rate increase.

Among precious metals, palladium fell 0.08% to $896.60 a troy ounce, platinum fell 0.77% to $962.55 a troy ounce, and silver fell 0.88% to $16.91 a troy ounce.

Among base metals, zinc rose 1.16% to $2,955 a metric ton, aluminum rose 0.59% to $2,039 a metric ton, tin rose 0.42% to $20,370 a metric ton, nickel rose 0.10% to $10,435 a metric ton, and lead rose 1.41% to $2,375 a metric ton.

Write to Marina Force at

Gold prices fell for the second straight day Tuesday, as cooling tensions between the U.S. and North Korea and a stronger dollar continued weighing on the precious metal.

Gold for December delivery was recently down 1.1% at $1,276.00 a troy ounce on the Comex division of the New York Mercantile Exchange.

A Tuesday report by North Korean state media that Kim Jong Un had made the decision not to fire on Guam pressured gold prices, which rose to their highest level in two months last week amid rising geopolitical tensions. Many investors buy gold and other haven assets during times of political uncertainty.

"Unless tensions between the United States and North Korea escalate into a military conflict, there should be little upside to gold prices from current levels," wrote Carsten Menke, commodities research analyst at Julius Baer.

The dollar climbing for a second straight day also weighed on gold, as the dollar-denominated metal becomes more expensive to foreign buyers when the greenback rises.

The WSJ Dollar Index, which tracks the U.S. currency against 16 others, was recently up 0.6% at 86.74. New data showing strong U.S. retail sales in July boosted the dollar and supported expectations that the Federal Reserve might raise short-term interest rates for a third time in 2017.

Higher rates tend to act as a headwind for gold, which struggles to compete with yield-bearing investments when rates rise.

In base metals, copper for September delivery fell 0.6% to $2.8880 a pound, on track for a fourth decline in the last five sessions.

Write to Amrith Ramkumar at

(END) Dow Jones Newswires

August 15, 2017 10:48 ET (14:48 GMT)