Gold bars are displayed at Degussa shop in Singapore. Picture: REUTERS
Gold bars are displayed at Degussa shop in Singapore. Picture: REUTERS

Bengaluru — Gold prices fell on Monday on revived hopes of a US-North Korea summit, while a strong dollar also weighed on the market.

Spot gold was down 0.3% at $1,297.71 an ounce at 2.43am GMT, while US gold futures for June delivery fell 0.5% to $1,297.10/oz.

"It looks like there is some chance of a meeting between the US and North Korea leaders, that would lower the geopolitical risks and lessen the appeal of gold," said John Sharma, an economist with National Australia Bank. A strong dollar was also pressuring prices, he said.

The dollar index, which measures the greenback against a basket of six major currencies, stood at 93.996, not far from 94.248 hit on Friday, its highest since November 14.

Donald Trump said on Sunday that a US team had arrived in North Korea to prepare for a proposed summit between him and Kim Jong-un.

"Risk sentiment has opened in a much friendly place this morning as a relief rally has ensued with the Trump-Kim summit back on, while the EU is in the midst of a relief rally after Paolo Savona was not endorsed for finance minister in Italy," said Stephen Innes, Asia-Pacific trading head at Oanda.

Efforts to form a coalition government in Italy collapsed on Sunday after its president rejected a eurosceptic pick for the key economy ministry, triggering a possible constitutional crisis and opening the prospect of fresh elections.

Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.42% to 848.50 tonnes on Friday.

Speculators trimmed their net long position in Comex gold by 3,800 contracts to 27,527 contracts in the week to May 22, US Commodity Futures Trading Commission (CFTC) data showed on Friday.

This was the smallest position since July 2017.

In other precious metals, silver was steady at $16.47/oz.

Platinum gained 0.4% to $900.10/oz while palladium eased 0.1% to $978.97/oz.

Trading volumes are expected to be low as the New York and London markets are closed on Monday for public holidays.