Gold price firms as dollar rally pauses, geopolitical tensions simmer

London (May 10)  Gold edged higher on Thursday as the dollar paused for breath, holding near its 2018 peak, with investors focused on U.S. inflation data due later and simmering tensions between the United States and Iran.

The dollar slipped slightly from a 4-1/2 month peak hit as long-term U.S. Treasury yields held near the psychologically important 3 percent level. A strong dollar makes dollar-priced gold costlier for non-U.S. investors.      

U.S. President Donald Trump on Tuesday withdrew the United States from an international nuclear accord with Iran, raising the risk of conlfict in the Middle East and increasing the appeal of safe-haven assets such as gold.          

"We've seen a turnaround in (the dollar) in the last few weeks, but actually gold hasn't gone down as far as you might
think, so political tensions are helping," said Macquarie
commodities strategist Matthew Turner.
    Turner added, however, that the dollar was the main driver
for gold and he expects the precious metal to come under
pressure in the near term, with the dollar extending its rally.
    Spot gold rose by 0.2 percent to $1,315.28 an ounce
by 0959 GMT. U.S. gold futures for June delivery were
also up 0.2 percent at $1,315.50.
    U.S. consumer prices data due at 1230 GMT is expected to
show that annual core CPI inflation rose to its
highest in more than a year in April, strengthening the case for
the Federal Reserve to raise interest rates.
    After reduced growth data in the euro zone and Britain in
recent weeks, the Fed remains the only major central bank that
appears to be on course for rate increases.
    Elsewhere, North American gold-backed exchange-traded funds
registered inflows in April at their highest level since
September 2017, with safe-haven purchases ushered in by a trade
stand-off between the United States and China, Syria tensions
and worries about possible U.S. sanctions on Russia.
    After Trump's announcement on the U.S. withdrawal from the
Iran nuclear deal, Israel said on Thursday that it had attacked
nearly all of Iran's military infrastructure in Syria after
Tehran fired rockets at Israeli-held territory for the first
time.            
    Spot gold looks neutral in a range of $1,302-$1,317 an
ounce, said Reuters technical analyst Wang Tao.            
    In other precious metals, silver gained 0.6 percent
to $16.59 an ounce after hitting a two-week high at $16.62 in
the previous session.
    Platinum rose 0.9 percent to $918.20 while palladium
       edged up by 0.1 percent to $975.72.

Reuters