Gold prices edged higher on Monday as weaker-than-expected economic data from the U.S. and a missile test by North Korea over the weekend pressured the dollar.       

Spot gold was up 0.3 percent at $1,232.45 per ounce at 0726 GMT and hovered just above the 100-day moving average. The yellow metal rose 0.3 percent on Friday.

U.S. gold futures were up 0.4 percent at $1,232.20 an ounce. North Korea said on Monday it had successfully conducted a newly developed mid-to-long range missile test on Sunday, supervised by leader Kim Jong Un and aimed at verifying the capability to carry a “large scale heavy nuclear warhead.”

“It (North Korea’s missile test) is underpinning support for gold but at the moment its obviously not escalated to the point where investors are becoming overly worried about,” said ANZ analyst Daniel Hynes.               

“It (North Korea-U.S. relations) has been an issue for sometime. Throwing in Trump into the mix sends a bit of ambiguity into the market. So subsequently (investors are) a bit more cautious about the outcome than they have been in the past.”             

U.S. data on Friday showed a smaller-than-expected 0.4 percent increase in April retail sales from the previous month, while a disappointing report on consumer prices raised concerns about the retail sector and the broader economy.                 

“The data seems to be pointing to a weakening trend (in the U.S. economy). Based on what we have so far, unless there is more stronger data, more than two (U.S.) rate hikes are not very likely,” Argonaut Securities analyst Helen Lau said.

Traders are expecting an almost 100 percent probability of an interest rate increase in June, CME Group’s FedWatch showed. 

Source: Reuters