Gold Continues Fall Amid Easing North Korea Tensions
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 closed down 0.8% at $1,279.70 a troy ounce on the Comex division of the New York Mercantile Exchange, slightly paring earlier losses after falling as much as 1.4% earlier in the session. Even with the modest recovery, gold had its worst day in more than a month.
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 0.5% at 86.65. 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 0.7% to $2.8830 a pound, its fourth decline in the last five sessions
(END) Dow Jones Newswires
August 15, 2017 15:27 ET (19:27 GMT)