By Swati Verma
BENGALURU (Reuters) - Gold prices edged up on Wednesday from an eight-week low hit the session before, with the dollar slipping after U.S. President Donald Trump abruptly dismissed FBI Director James Comey.
Spot gold, which is priced in dollars, was up 0.1 percent at $1,221.47 per ounce at 0715 GMT. In the previous session, it dropped below its 100-day moving average to its lowest since March 15 at $1,213.81.
"We think that gold's slide could perhaps extend to $1,180 to $1,200, an area of good technical support," said INTL FCStone analyst Edward Meir.
"At that point, we should see some decent buying set in, as a roughly 10-percent correction from the highs should make holding the precious metal a more attractive risk-reward proposition."
U.S. gold futures climbed 0.4 percent to $1,221.50 an ounce.
The dollar slid on Wednesday and the perceived safe-haven yen gained after Trump fired Comey in a move that shocked Washington.
Rekindled fears that North Korea could be gearing up for another weapons test also supported gold.
In an interview with Sky News on Tuesday, Pyongyang's ambassador to the United Kingdom, Choe Il, said North Korea is ready to conduct a sixth nuclear test. Observers of that country have said such a test was likely, but his comments reminded markets that tensions could escalate on the recently calm Korean peninsula.
However, expectations of U.S. monetary policy tightening next month dragged on bullion prices.
Prices have fallen about $75 per ounce since hitting a five-month high of $1,295.42 in mid-April.
"Gold has lost its appeal as a safe-haven ... markets are refocusing on the growth momentum in the U.S. and prospects of future rate hikes. With French elections over now, there are not many geopolitical risks," Argonaut Securities analyst Helen Lau said.
Interest rate increases could dent demand for non-interest bearing gold, while gold is also used as an alternative investment during times of political and financial uncertainty.
Interest rate futures implied traders saw close to a 90-percent chance the Federal Reserve would raise interest rates at its June 13-14 policy meeting, according to CME Group's FedWatch tool.
In other precious metals, silver was up 0.1 percent at $16.15 an ounce. In the previous session, it fell to its weakest since Jan. 3 at $16.01.
Platinum gained 0.2 percent to $902.80, while palladium was down 0.3 percent at $793.52 an ounce.
(Reporting by Swati Verma in Bengaluru; Editing by Joseph Radford and Sherry Jacob-Phillips)
Disclaimer: No Business Standard Journalist was involved in creation of this content
