April 27, 2018 / 10:35 AM / a month ago

PRECIOUS-Gold gains but remains vulnerable after Korean leaders meet

    * Gold on track for second weekly fall
    * Silver set for biggest weekly fall in nearly three months
    * Platinum hits four-month low

 (Updates prices, adds comment on platinum/palladium spread)
    By Eric Onstad
    LONDON, April 27 (Reuters) - Gold edged higher on Friday but
is likely to revisit five-week lows after the prospect of a
Korean denuclearisation deal eroded bullion's safe-haven appeal.
    The leaders of South and North Korea embraced after pledging
on Friday to work for the "complete denuclearisation of the
Korean peninsula".             
    Spot gold        was up 0.1 percent at $1,318.52 an ounce by
1245 GMT, not far from a low of $1,315.06 hit in the previous
session, its weakest since March 21.
    The metal was on track to finish the week down more than 1
percent for its second consecutive weekly decline and the
biggest weekly drop in four.    
    U.S. gold futures         added 0.1 percent to $1,319.40.
    "We have the pictures from the meeting of the two Korean
leaders today, showing geopolitical hotspots have calmed down
massively, so there's scant argument to be bullish on gold at
the moment," said Carsten Fritsch, commodity analyst at
Commerzbank in Frankfurt.
    Adding to the pressure on gold, the dollar was firmer, bond
yields higher and spot gold slipped below its 100-day moving
average, he said.
    Activtrades chief analyst Carlo Alberto De Casa said:
"That's a very negative sign for technical oriented investors
... I expect gold to briefly dip below $1,300, but physical
buying will kick in to support the price.    
    "The strength of the U.S. dollar - combined with the
weakness of the eurozone currency after (ECB chief) Mario
Draghi's speech - is pushing down the yellow metal."
    The dollar hit a 3-1/2-month high against a basket of
currencies        on higher U.S. yields while the euro was
hampered by a dovish tone from the European Central Bank.       
            
    On Wednesday the benchmark 10-year Treasury yield
            reached its highest since January 2014 at 3.035
percent.      
    A rise in U.S. bond yields pressures gold by reducing the
attractiveness of non-yielding bullion, which is priced in
dollars.
    Silver        rose 0.3 percent to $16.53 an ounce. It is
down more than 3 percent this week, the biggest weekly drop
since since the week ending Feb. 2.
    Platinum        dipped by 0.1 percent to $905.49 an ounce
after touching $900.50, its weakest since Dec. 18.
    Palladium        eased by 0.5 percent to $979.60 an ounce.
It has rallied nearly 10 percent since U.S. sanctions were
imposed on Russian entities on April 6. Russia is the world's
biggest producer of palladium. 
    The spread between platinum and palladium has widened to $75
from about $50 over the past three days.
    "I expect the price gap between platinum and palladium to
narrow again because palladium's rise was due to these
unjustifed sanctions fears and the price weakness in platinum
was exaggerated in the last few days," Fritsch said.

 (Additional reporting by Swati Verma in Bengaluru
Editing by Jane Merriman and David Goodman)
  
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