Picture: ISTOCK
Picture: ISTOCK

London — Gold steadied on Thursday after its biggest one-day drop in more than six weeks, finding support from a retreat in the dollar and concerns about North Korea and the French election.

Polls ahead of the French vote, which begins this weekend, give both far-right and far-left candidates a chance of making it into the run-off in May.

Spot gold was at $1,278.26 an ounce at 9.50am GMT, little changed from $1,278.91 late on Wednesday. The metal hit a five-month high of $1,295.42 an ounce on Monday, before pulling back.

"Gold is consolidating what have been fairly wide moves in the last week or two, and is trying to tackle overhead resistance in the $1,290-$1,292 area," Societe Generale analyst Robin Bhar said, adding that $1,300 was the short-term target.

"But the market is taking its cues from other financial assets, particularly the dollar," he said. "A lot of geopolitical tensions haven’t really been resolved … so gold has a good underpinning here."

The dollar fell to a three-week low against the euro and a basket of major currencies on Thursday, buffeting assets priced in the US currency, while world stocks eked out small gains as investors resisted risky bets before the first round of the French vote.

Holdings of the world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose 11.8 tonnes on Wednesday, their biggest one-day inflow since September, data from the fund showed. Spot prices fell 0.8% on Wednesday, their biggest one-day drop since March 7, after last week’s rally failed to beat resistance posed by a declining trendline from the 2011 record high.

So far, prices are on track to fall this week after five straight weeks of gains. "While the metal is well positioned for a test of $1,300 with geopolitical concerns underpinning its safe-haven status, the failed tests of $1,290 are beginning to weigh upon investor confidence," MKS said in a note.

"Support towards $1,275 should keep the price action buoyant over the short term, especially leading into this weekend’s French election," MKS said.

US gold futures for June delivery were down $2.90 an ounce at $1,280.50. The other precious metals rose meanwhile.

Silver was 0.6% higher at $18.187, while platinum was up 0.4% at $967. Palladium was the strongest gainer of the day, up 1.6% at $787.30.

Reuters

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