Gold slips ahead of North Korea summit, expected Fed rate action

Gold futures slipped Monday as a wait-and-see mood took over ahead of the much-touted meeting over North Korea’s nuclear power and two major central bank decisions on the docket this week.

August gold  fell $3.70, or 0.3%, to $1,298.80 an ounce. The metal had managed a modest weekly return of about 0.3% last week after challenging the closely watched $1,300 line.

“Market participants are already looking ahead,” said Carsten Fritsch, analyst at Commerzbank, in a note. “Tomorrow will see U.S. President Donald Trump and North Korean leader Kim Jong Un meet in Singapore. If agreement were to be reached there, geopolitical risks in the region would probably decrease, resulting in less demand for gold as a safe haven.”

“The meetings of the Federal Reserve and European Central Bank will play a more important role for gold, however,” Fritsch said. “While there is every likelihood of the Fed raising interest rates again, the ECB may announce that it will be ending its expansionary monetary policy.”

Global trade issues remained in the fore, though fresh direct market impact was so far limited, after weekend tensions between Trump and Canadian Prime Minister Justin Trudeau, with Trump withdrawing his support for the Group of Seven communiqué after Trudeau criticized U.S. tariffs on Canadian metals.

Trump is now in Singapore preparing for Tuesday’s much-anticipated meeting with North Korean leader Kim on Tuesday.

As for interest-rate policy, the key driver of currency and gold levels, the Federal Reserve is expected to raise interest rates after its two-day meeting that begins Tuesday. European Central Bank policy makers are expected to announce the timing of a reduction of its crisis-era asset-purchase initiative when it meets on Thursday.

Meanwhile, July silver  bucked gold’s move, trading up 0.3% to $16.785 an ounce. It logged a weekly rise of 1.8% as gold’s sister commodity, which also attracts industrial-use demand, handily outperformed its rival.

July copper  traded at $3.2555 a pound, down 1.4%. The contract grazed $3.30 at Friday’s finish, the highest settlement of the year so far for a most-active contract. It logged a sharp weekly rise of 6.5%.

July platinum  fell 0.2% to $904.30 an ounce. September palladium  rose 0.1% to $1,006.80 an ounce.

Among exchange-traded funds, SPDR Gold Shares  slipped 0.2%. The iShares Silver Trust  was flat, but the VanEck Vectors Gold Miners ETF  fell 0.4%.