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PRECIOUS-Gold steadies off highs as dollar weighs, N.Korea tensions support
August 30, 2017 / 10:45 AM / 20 days ago

PRECIOUS-Gold steadies off highs as dollar weighs, N.Korea tensions support

    * Palladium off 16-1/2-year peak hit in previous session
    * Dollar bounces back from 2-1/2-year low

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Maytaal Angel
    NEW YORK/LONDON, Aug 30 (Reuters) - Gold steadied on
Wednesday, as a stronger dollar pushed the metal off Tuesday's
9-1/2-month high, but the precious metal remained above $1,300
on renewed tensions between Washington and North Korea.
    The dollar index        rose 0.6 percent versus a currency
basket following stronger-than-expected private payrolls data.
The move marked the greenback's recovery from a 2-1/2-year low
hit Tuesday after Pyongyang fired a ballistic missile over
Japan.                    
    U.S. President Donald Trump on Wednesday said "talking is
not the answer" to the tense standoff with North Korea over its
nuclear missile program. His defense chief, however, swiftly
asserted that the United States still has diplomatic
options.            
    A stronger dollar, seen as a safe haven asset, makes
dollar-priced gold costlier for non-U.S. investors.
    "Sentiment in (gold) futures has recently shifted from
bearish to bullish and with the break of $1,300 we think this
will continue for a while," said Carsten Menke, analyst at
Julius Baer.
    "(But) currency-related headwinds should return to gold this
year, plus we don't see strong investment demand. This puts the
whole rally above $1,300 on a rather weak footing (longer
term)."
    Spot gold        slipped by 0.1 percent to $1,307.51 an
ounce by 2:08 p.m. EDT (1808 GMT). On Tuesday, the price jumped
to $1,325.94, the highest since Trump was elected U.S.
president. It was on track to close August up by around 3
percent, its second straight monthly gain.
    COMEX gold futures         settled down 0.4 percent at
$1,314.10.
    "A perfect storm of escalating regional tensions around
North Korea as well as an increasingly unpredictable Trump
policy outlook, low (interest) rates and a weak U.S. dollar have
boosted COMEX gold prices above our third-quarter base-case
average of $1,235/oz," said Citi Research in a note.
    U.S. disarmament ambassador Robert Wood, addressing the
U.N.-sponsored Conference on Disarmament, called on Wednesday
for "concerted action" to pressure North Korea into abandoning
its banned nuclear and missile programs by fully enforcing
economic sanctions.
    "Do we think that the geopolitical issue will intensify? No,
we don't, but we cannot rule it out either," said Dominic
Schnider at UBS Wealth Management in Hong Kong. 
    Elsewhere, holdings of the largest gold-backed
exchange-traded-fund (ETF), New York's SPDR Gold Trust      ,
rose 0.25 percent on Tuesday from Monday, data showed.
            
    Among other precious metals, silver        rose 0.2 percent
to $17.37 per ounce. Platinum        fell 0.6 percent to $985.95
per ounce, while palladium        dipped 1 percent to $933.75
per ounce, falling from the prior session's 16-1/2-year high. 

 (Additional reporting by Arpan Varghese; editing by Mark
Heinrich and Tom Brown)
  

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