Gold futures rise on continued geopolitical tension between US, DPRK

Reuters

Reuters

Gold prices fell on Tuesday, as strength in the US dollar pressured the precious metal into giving back all of the previous session's gains and then some. December gold lost $5.70, or 0.4%, to settle at $1,291 an ounce after climbing roughly 0.4% on Monday. USA gold futures settled down 0.4 percent at $1,291.

Gold prices were little changed on Monday, as market players looked ahead to this week's annual meeting of top central bankers and economists in Jackson Hole, Wyoming, where the heads of the U.S. and European central banks will be making keynote speeches.

The firm greenback makes dollar-denominated commodities more expensive for holders of other currencies, which could subdue demand.

"From the Fed's perspective, we think they are not too concerned about weaker than expected inflation readings.It's pretty clear the Fed needs to raise rates".

"Dovish monetary policy, especially from the Fed, and/or significant escalation of geopolitical risks are potential triggers".

Tensions between North Korea and the United States, which began long planned joint military drills with South Korea on Monday, are also in focus. That compares with last week's peak at $1,300.8 its highest since early November. North Korea said the drills were a step towards nuclear conflict.

"Palladium has been pushed up by speculative funds, there is nothing in the fundamentals to justify these levels", a precious metals trader said, adding that a slowdown in USA auto sales over coming months would spike the bubble.

Elsewhere in precious metals trading, silver was at $16.98 a troy ounce late Friday, while platinum settled at $981.75 and palladium slid 0.14% to $924.85 a troy ounce.

But platinum is predominantly used in diesel engines and palladium in gasoline engines, which dominate the US market.

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