Gold price slips as dollar hits 2018 high, Iran tensions underpin

London (May 8)  Gold slipped on Tuesday as the dollar surged to a new 2018 high against its rivals, though losses were limited by worries the United States may be set to pull out of a key nuclear accord with Iran. U.S. President Donald Trump will announce at 1800 GMT whether Washington will withdraw from a deal that eased economic sanctions on Iran in exchange for Tehran limiting its nuclear programme.

A decision to leave the accord could raise risk aversion in the broader markets, helping gold, seen as a safe asset that holds its value in times of geopolitical turmoil. Still, gold has been under pressure over the last three weeks with the dollar having rallied around 4.5 percent. A strong dollar makes dollar-priced gold costlier for non-U.S. investors. "A stronger dollar has created headwinds for gold but we don't see the dollar going much higher on a medium term basis and in terms of geopolitics there are some factors to keep an eye on," said Jens Pederson, senior analyst at Danske Bank. "It's not our base case that the (Trump announcement) will turn out to be a big market moving event but the risk (is there) that Iran will be hit with sanctions and (so we) could see gold buying again." Spot gold was down 0.3 percent at $1,309.57 per ounce at 1016 GMT. The precious metal has lost some 3.5 percent of its value over the last three weeks. U.S. gold futures for June delivery were down 0.3 percent at $1,309.80 per ounce.

Against a basket of rivals, the dollar surged to a 2018 high as expectations that other major central banks would follow the footsteps of the U.S. Federal Reserve in normalising monetary policy have been dashed. Gold in 2018 will deliver its strongest annual price performance in five years, GFMS analysts forecast on Tuesday, as political uncertainty drives investment in bars and bullion-backed investment funds. In industry news, the World Gold Council, owner of the world's largest gold-backed exchange traded fund (ETF), is launching a new fund with a cut-price management fee to fend off rivals with lower charges. Spot gold may revisit its May 1 low of $1,301.51 per ounce as it twice failed to break resistance at $1,317, Reuters technical analyst Wang Tao said. Silver slipped 0.2 percent to $16.41 an ounce, while platinum was flat at $904 an ounce, having hit its highest since April 25 in the last session. Palladium rose 0.4 percent to $975.72 an ounce, after hitting on Monday its highest since April 27.

Reuters