Gold Dips Slightly As Dollar Recovers

Gold prices tumbled to their lowest finish in a week on Wednesday as the dollar clawed its way up from the three-week low reached Tuesday.

Still, tensions over North Korea and looming French and U.K. elections that hold implications for the European economy have provided haven investor demand for precious metals in recent days. Gold prices scored a fifth straight session gain on Tuesday to settle at their highest level since early November.

Gold prices tumbled to their lowest finish in a week on Wednesday as the dollar clawed its way up from the three-week low reached Tuesday.

Still, tensions over North Korea and looming French and U.K. elections that hold implications for the European economy have provided haven investor demand for precious metals in recent days. Gold prices scored a fifth straight session gain on Tuesday to settle at their highest level since early November.

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Meanwhile, U.S. equities, assets considered risky, traded on a mixed note, while crude-oil futures dropped on the back of a surprise weekly climb in U.S. gasoline stockpiles, ahead of the May contract’s expiration Thursday.

“Ultimately we think the [dollar] rally can resume as markets start to focus on stronger U.S. growth driven by capital expenditure which could drive inflation higher,” said Morgan Stanley analysts in a note.

But global considerations are a key focus as well, as political uncertainty can boost demand for less risky investments.

Julian Phillips, co-founder of GoldForecaster.com, said he doesn’t believe the gold market has priced in the uncertainty surrounding the French or German elections.

It won’t be priced in unless Marine Le Pen “is in the run off” in France—likewise if German Chancellor Angela Merkel “is unseated, then gold will react to that,” said Phillips.

Read: The Smart Money Is Looking At This Previously Owned Barrick Gold Mine In Nevada

Investors remained nervous ahead of France’s first round of the country’s presidential election on Sunday, as a closely watched poll showed voting is too close to call, though does give centrist Emmanuel Macron the edge to win overall.

British Prime Minister Theresa May’s call on Tuesday for a snap general election in June, a strategic step as she navigates Britain’s exit from the European Union, added to riskier market nervousness, underpinning gold and silver.

Other metals finished mixed, with May copper HGK7 closing up 0.2% at $2.535 a pound, July platinum PLN7 down 0.9% at $968.60 an ounce and June palladium PAM7 ending with a 0.6% gain at $775.60 an ounce.

In metals exchange-traded funds, the SPDR Gold Trust GLD fell 0.6%, while the VanEck Vectors Gold Miners ETF GDX dropped 3.6%, and the iShares Silver SLV was down 0.7%.

 

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