Gold prices gained in Asia on Tuesday with risk heightened as President Donald Trump declared North Korea a state sponsor of terrorism, using more stick in dealings with Pyongyang even as contacts are said to be underway to lead to talks.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose 0.36% to $1,279.92 a troy ounce.
Overnight, gold prices fell on Monday as a slump in the euro amid rising political uncertainty in Germany pushed the dollar to a nearly one-week high dampening demand for the precious metal.
Chancellor Angela Merkel said on Monday that she would prefer new elections rather than lead a minority government after talks to form the country’s next government collapsed overnight.
That sparked concerns over the future leadership position of chancellor Merkel, pressuring the euro to lows, while supporting an uptick in the dollar to trade higher against a basket of global currencies.
The U.S. dollar index, which measures the greenback’s strength against Also adding to gold weakness was the prospect of higher interest rates as the Federal Reserve’s December 12-13 meeting draws closer amid strong expectations the central bank will raise rates.
According to investing.com’s fed rate monitor tool 100% traders expect the Federal Reserve to raise rates.
Gold is sensitive to moves higher in both bond yields and the U.S. dollar.