Gold Slides, Dollar Hits Back


Gold prices started the week on a softer note from its 1-year high, and the dollar gained on Monday morning as concerns about the US-North Korea standoff eased up.

Spot gold was 0.7 percent down at $1,339 per troy ounce. It hit its highest since last year’s August 3 at $1,362 on Friday’s session. December deliveries of US Gold Futures were also 0.7 percent down at $1,341 per troy ounce.

The dollar, on the other hand, strengthened on Monday morning in Asia. The good performance was attributed to the surprisingly silent weekend passing without news of any missile or nuclear weapons test by North Korea. Aside from gold, safe haven yen was also negatively affected because of this silence. Yen traded in the morning at ¥108.28, which meant it was 0.4 percent weaker than Friday’s ¥108.

A report said that instead of conducting another missile test last weekend, North Korean dictator Kim Jong-Un decided to throw a party to celebrate the anniversary of the hermit country’s founding.

The dollar index, a basis where the dollar strength is measured against a trade-weighted basket of six major currencies, was at 91.55, which suggested a 0.3 percent increase from Friday’s 90.99. Friday’s result was considered its 2 1/2-year low.

Gold, meanwhile, has been well-supported recently as the ultimate safe haven amid the geopolitical tensions lingering on the Korean peninsula. The lower expectations for the tightening of US monetary policies also helped support gold prices.

The US economic data that will be released next week is what global financial markets are awaiting, putting Thursday’s inflation report at the main focus. The data will provide further clues for the markets on the timing of the next Federal Reserve rate hike.

Markets remain doubtful of another rate hike before the end of this year because of subdued inflation outlooks. However, it is also anticipated to start reducing its balance sheet soon.

On Friday, New York Fed President William Dudley said on a TV interview that it is quite too early to predict the next US interest rate hike as it continues tightening its policies, along with the “cross currents” in the economy and markets.

Meanwhile, US President Donald Trump signed a bill on the same day. The bill’s purpose is to extend the government’s debt limit for three months, and to provide hurricane-related aid that amounts to over $15 billion.

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