Gold prices edged lower on Wednesday as safe-haven buying failed to kick in after the United States withdrew from the Iranian nuclear accord. Dismayed European allies sought to salvage the international nuclear pact with Iran after US President Donald Trump pulled the United States out of the landmark accord, reached in 2015 before he took office. "The fact that the cat is out of the bag and we have the announcement (on Iran) - that has removed some of the geopolitical support for gold," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
During times of political or economic uncertainty, gold prices often receive a boost as the metal is widely considered a safe-haven asset alongside the dollar and the Japanese yen. Also weighing on gold, geopolitical tensions in the Korean peninsula continued to ease as North Korea freed three American detainees ahead of talks between Trump and North Korea leader Kim Jong Un.
Spot gold was down 0.01 percent at $1,313.91 an ounce by 1400 GMT after touching its lowest since May 3 at $1,304.11. US gold futures for June delivery edged up 0.03 percent to $1,314.10 per ounce. The dollar index rose to a fresh 2018 peak but later went into negative territory after US producer prices rose less than expected. Yields on the benchmark 10-year Treasury note breached the key 3 percent level.
A series of US bond auctions this week could further push up yields and pressure gold, running the risk that gold will challenge the key $1,300 support area, Hansen added. The prospect of more US interest rate increases will also weigh on gold, Standard Chartered analyst Suki Cooper said. "We continue to expect prices to test the downside in the lead-up to the June FOMC meeting as the market re-prices the Fed hiking trajectory," she said in a note.
Spot gold may revisit its May 1 low of $1,301.51 per ounce as it failed three times to break resistance at $1,317, said Reuters technical analyst Wang Tao.However, a surge in oil prices on Wednesday to the highest since 2014 may stoke inflation and offer support to gold, analysts said. In other precious metals, silver rose 0.9 percent to $16.57 an ounce, platinum was unchanged at $912 an ounce and palladium added 0.7 percent to $975.97 an ounce.