Gold Dips to Two-week Low at $1,275.8/Ounce

Window display of jewelry shop

Gold, on Monday, October 25,  hit its lowest in over two weeks as the dollar climbed to a three-month high versus the yen after Japan’s ruling bloc scored a big win in Sunday’s election, leaving the door open to ultra-loose monetary policy for longer.

Spot gold was down 0.4 percent at $1,275.81 an ounce by 0637 GMT, after hitting its lowest since Oct. 6 at $1,273.80 earlier in the session.

U.S. gold futures for December delivery fell 0.3 percent to $1,277.30 per ounce.

“This move is just really because of the dollar strength,” said Yuichi Ikemizu at ICBC Standard Bank in Tokyo.

“There’s no news on North Korea this past week or so. If some news comes out, gold might be supported but at the moment people are just watching the dollar.”

Geopolitical risks can boost demand for safe-haven assets such as gold and the Japanese yen.  Japanese Prime Minister Shinzo Abe’s Liberal Democratic Party-led (LDP) coalition won a combined 312 seats, keeping its two-thirds “super majority” in the 465-member lower house, local media said.

The dollar also rose against a basket of major currencies , supported by a rise in U.S. Treasury yields and progress in tax reforms.

Meanwhile, U.S. President Donald Trump is considering nominating Federal Reserve Governor Jerome Powell and Stanford University economist John Taylor for the central bank’s top two jobs.

Spot gold may seek support in a narrow zone of $1,271-$1,273 per ounce before bouncing towards $1,283, Reuters technicals analyst Wang Tao said.

In other precious metals, silver was down 0.2 percent at $16.97 an ounce. Platinum fell 0.5 percent to $916 an ounce and palladium dropped 0.4 percent to $971.20.