May 28, 2018 / 5:54 PM / 3 months ago

PRECIOUS-Gold falls on dollar gains, prospects for U.S.-N.Korea summit

    * Safe-haven demand dwindles
    * U.S. team in N.Korea to prepare for summit
    * Dollar strengthens to new 2018 high
    * Gold falls below $1,300
    * COMEX net long at 10-month low

 (Updates prices, adds quotes)
    By Nicole Mordant and Peter Hobson
    VANCOUVER/LONDON, May 28 (Reuters) - Gold prices fell for a
second session on Monday as the U.S. dollar firmed and after
U.S. President Donald Trump revived hopes that he would meet
North Korean leader Kim Jong Un next month, lowering political
tensions and demand for gold as a safe-haven investment.
    The dollar strengthened to a 2018 high, pressuring gold by
making it more expensive for buyers holding other currencies.
             
    Spot gold        slipped 0.3 percent to $1,297.70 an ounce
by 1:25 EDT (1725 GMT), while U.S. gold futures         for June
delivery were down 0.4 percent at $1,298.20.
    Trading volumes were low, with New York and London markets
closed for public holidays.
    "We've migrated lower from just north of $1,300 towards the
end of the week. The U.S. dollar jumped a little ... as the
Canadian dollar and euro fell off here," said TD Securities head
of commodity strategy Bart Melek.
    Trump last week pulled out of the June 12 summit, pushing
gold above $1,300 an ounce, but then reversed his decision and
said on Sunday that a U.S. team had arrived in North Korea to
prepare.               
    "It looks like there is some chance of a meeting between the
U.S. and North Korean leaders that would lower geopolitical
risks and lessen the appeal of gold," said National Australia
Bank economist John Sharma. 
    Gold is traditionally used as a safe place to store assets
during times of uncertainty. 
    Gold had been trading between about $1,310 and $1,360 since
hitting a 1-1/2-year high in January, but it was pushed lower
this month as the dollar strengthened.
    More weakness could be in the offing, Melek said, on
expectations that the Federal Reserve would proceed with lifting
benchmark U.S. interest rates this year. 
    Higher rates typically weigh on gold as they increase the
opportunity cost of holding non-yielding assets such as bullion.
    Speculative bets on higher prices have fallen sharply, with
funds' net long position in COMEX gold falling to its lowest in
10 months.             
    Prices are now trapped between gold's 200-day moving average
at $1,307 and Fibonacci support at $1,286, said Saxo Bank
analyst Ole Hansen. 
    "The potential for fireworks is biggest on the upside given
the sharp reduction we have seen in speculative longs," he said.
"If we do break higher, the funds will have to chase the market
to rebuild their long positions."
    In other precious metals, spot silver        was down 0.05
percent at $16.47 an ounce.
    Speculative investors have become less pessimistic about
prices, with data on Friday showing their net short position in
COMEX silver at its lowest since February 2014. [            ]
    Platinum        was up 0.6 percent at $902 while palladium
       had gained 0.5 percent to $984.50.

 (Additional reporting by Swati Verma in Bengaluru
Editing by Edmund Blair and James Dalgleish)
  
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