May 25, 2018 / 1:33 AM / a month ago

Gold holds above $1,300 after Trump ditches North Korea summit

LONDON (Reuters) - Gold prices steadied on Friday after breaking above $1,300 an ounce in the previous session when U.S. President Donald Trump called off a meeting with North Korean leader Kim Jong Un, raising political tensions.

Gold U.S. dollar bullion coins are seen in this photo illustration taken in Moscow, Russia, August 4, 2017. REUTERS/Maxim Shemetov/Files

Spot gold was up 0.1 percent at $1,306.03 an ounce at 1141 GMT and on track for a weekly gain of 1.1 percent, its biggest since March.

U.S. gold futures for June delivery were also 0.1 percent higher at $1,305.60.

Gold is traditionally used as a safe place to park assets in times of uncertainty, but Trump’s decision would have limited impact on prices, said Julius Baer analyst Carsten Menke.

“This is pretty typical for these kinds of geopolitical jitters. Very short-term sharp reaction, then a lack of follow through, given that this basically does not have any implication for the global economy or financial markets,” he said.

“Based on this pattern and on gold’s very tight relationship with the U.S. dollar, this uplift in price should be temporary and we should fall back below $1,300 an ounce.”

Gold tends to move higher when the U.S. dollar weakens because this makes dollar-priced bullion cheaper for buyers with other currencies.

But after losing ground on Thursday the dollar strengthened with support from a North Korean statement that it was open to resolving issues with the United States.

Global shares also regained some lost ground after Pyongyang’s measured response to Trump’s announcement, reducing the clamour for gold as a safer asset.

On the technical side, resistance was at gold’s 200-day moving average around $1,307, with Fibonacci support at $1,286.80, ScotiaMocatta analysts said.

Investors were focused on the psychologically important $1,300 level, MKS trader Samuel Laughlin said. “We look to (this) key level as a pivot point for near-term price action,” he said.

Gold had been trading in a range between about $1,310 and $1,360 since hitting a 1-1/2 year high in January but was pushed lower this month by a strengthening dollar and rising U.S. bond yields, which reduce the appeal of non-yielding gold.

In other precious metals, silver was up 0.3 percent at $16.68 an ounce, on track for a weekly gain of 1.6 percent.

Platinum was 0.1 percent higher at $910, up 3.1 percent on the week, while palladium was up 0.5 percent at $979 and set for a weekly gain of 1.7 percent.

Additional reporting by Apeksha Nair and Karen Rodrigues in Bengaluru; Editing by David Goodman

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