Gold prices inched higher Monday on subdued dollar as investors considered the prospects of fewer USA interest rate increases in 2018.
Spot gold was 0.2 percent higher at $1,292.19 by 1:39 p.m. ET (1739 GMT), having gone as low as $1,286.20, its weakest since December 27.
Gold is highly sensitive to rising USA rates as these tend to boost the dollar and push bond yields up, adding pressure on the greenback-denominated, non-yielding bullion. The slight pick up (yesterday) suggests there might have been some opportunistic buying on the part of investors, said National Australia Bank economist John Sharma.
"Rising U.S. bond yields and a stronger dollar were factors behind gold's decline below the $1,300 level".
The most active gold contract for June delivery plunged 27.9 USA dollars, or 2.12 percent, to close at 1,290.3 dollars per ounce.
But higher 10-year Treasury yields, which stayed near highs hit on Tuesday, capped gold's gains, traders said, as the USA dollar came off its highs.
Meanwhile, Asian shares were under pressure after North Korea cancelled high-level talks with Seoul, denouncing military exercises between South Korea and the US and throwing into question next month's unprecedented summit between Kim Jong-un and US President Donald Trump.
While gold prices are likely to be drawing some support from a rift between the US and Iran, investors said easing US-China trade concerns could add downside risks to prices.
Higher U.S. interest rates, possibly in June at the Federal Reserve's next meeting, will weigh on gold, but analysts say they are unlikely to push gold significantly lower.
Higher interest rates in the USA and a rising dollar would continue to add downward pressure on gold, Lau said.
Bullion had suffered its biggest single-day loss since November 2016 when it fell 1.7 percent on Tuesday to below the 200-day moving average and the psychologically significant $1,300-an-ounce level.
Silver was up 0.3 percent at $16.67 an ounce, platinum rose 0.3 percent to $924.60 and palladium slipped by 0.4 percent to 992.05. This article is strictly for informational purposes only.
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