Gold slipped on Monday as the dollar strengthened against the yen, with the greenback buoyed by a smooth meeting between US President Donald Trump and Japanese Prime Minister Shinzo Abe that saw no mention of currency policy. Spot gold had fallen 0.31 percent to $1,230.22 per ounce by 0608 GMT, while US gold futures were down 0.36 percent at $1,231.3.
The dollar briefly touched its highest since January 30 at 114.17 yen, with relief that Trump set aside his tough campaign rhetoric over security and jobs in a meeting with the Japanese Prime Minister over the weekend. "Quietness on the protectionism front and a rekindling of the Trump-flation trade is taking the wind out of gold's safe-haven sails," said Jeffrey Halley, senior market analyst at OANDA.
A senior Japanese government spokesman said Abe and Trump did not discuss currency issues and that Trump did not request a bilateral trade deal. Spot gold may revisit its February 10 low of $1,221.02 per ounce, according to Reuters technical analyst Wang Tao. However, political risk from elections in Europe and worries over Trump's policies will maintain underlying safe-haven appetite for the metal, traders said. "Prices are likely to recover again, even though there may be slight corrections," said Hareesh V, research head at Geofin Comtrade Ltd.
"Global uncertainty from the US, Europe and on the Korean front will drive global prices high again as prices couldn't break the December-low," he added. Gold has rallied nearly 10 percent after touching its lowest in over 10 months, at $1,122.35 an ounce, in December, following the US Federal Reserve's move to raise interest rates for the first time in a year.