On Thursday, gold prices dipped in response to a decline in worldwide political tensions. This separated a string of gains for four consecutive sessions.
Spot gold XAU was down to $1,347.60 per oz (down 0.1 percent) by 1240 GMT. Meanwhile, U.S. gold futures GCcv1 was at $1,350.80 per oz (down 0.2 percent.)
Georgette Boele, a commodity strategist at ABN AMRO in Amsterdam, said that there has been decreased uncertainty and that trade risks have moved to the background.
How are Political Happenings Affecting the Price of Gold?
On Wednesday, President Donald Trump said he hoped that a summit with North Korea’s leader Kim Jong Un would be successful while missile strikes in Syria from the west are less extensive than previously feared.
Earlier this week, an administration official stated that Trump had delayed imposing more sanctions on Russia.
According to Boele, gold is expected to decline to near 1,330 after it fails to break above resistance. She says there was some upward momentum, but it is still only in the range of $1,300 to $1,365. At the moment it’s more of a technical trade. If it doesn’t succeed in trying the upside, then it will fall back.
According to Commerzbank, there is little reaction from gold to the market participants’ concerns on the new sanctions against Russia and an assortment of other uncertainties.
Spot gold is facing resistance at $1,356 per oz and could break above, leading to a gain to $1,365.23 per oz according to Reuters technical analyst Wang Tao.
Spot silver prices (XAG=) at the meantime rose 0.7 percent to $17.27 per oz. This is the highest spot silver has been since the first of February at $17.345.
The raise in silver was not a surprise to Boele who said there is lower liquidity and is more sensitive to sentiment. She expects silver to trail after gold lower in the next few days or weeks.
Another use for silver is industrial purposes. Therefore, it has been raised by a rally in base metals.
The downside is limited in silver since it was the one pushed too low. There are also no positions to be squeezed.
Of the precious metals, silver is the worst performing in the past six months. There has been almost no change, especially when considering the 4.5 percent rise in gold or the 7.7 percent rise in palladium.