Gold falls on revived prospects for U.S.-North Korea summit

By Peter Hobson

LONDON (Reuters) - Gold prices fell for a second session on Monday after U.S. President Donald Trump revived hopes that he would meet North Korean leader Kim Jong Un next month, lowering political tensions and demand for gold as a safe haven investment.

The dollar also strengthened to a 2018 high, pressuring gold by making it more expensive for buyers holding other currencies.

Spot gold slipped by 0.2 percent to $1,298.42 an ounce by 1355 GMT, while U.S. gold futures for June delivery were down 0.5 percent at $1,297.80.

Trading volumes were low, with New York and London markets closed for public holidays.

Trump last week pulled out of the June 12 summit, pushing gold above $1,300 an ounce, but then reversed his decision and said on Sunday that a U.S. team had arrived in North Korea to prepare.

"It looks like there is some chance of a meeting between the U.S. and North Korean leaders that would lower geopolitical risks and lessen the appeal of gold," said National Australia Bank economist John Sharma.

Gold is traditionally used as a safe place to store assets during times of uncertainty.

Gold had been trading between about $1,310 and $1,360 since hitting a 1-1/2 year high in January, but it was pushed lower this month as the dollar strengthened.

Speculative bets on higher prices have fallen sharply, with funds' net long position in COMEX gold falling to its lowest level in 10 months.

Prices are now trapped between gold's 200-day moving average at $1,307 and Fibonacci support at $1,286, said Saxo Bank analyst Ole Hansen.

"The potential for fireworks is biggest on the upside given the sharp reduction we have seen in speculative longs," he said. "If we do break higher, the funds will have to chase the market to rebuild their long positions."

In other precious metals, spot silver was down 0.1 percent at $16.46 an ounce.

Speculative investors have become less pessimistic about prices, with data on Friday showing their net short position in COMEX sliver at its lowest since February 2014.

Platinum was up 0.9 percent at $904.20 while palladium had gained 0.3 percent to $982.47.

(Additional reporting by Swati Verma in Bengaluru; Editing by David Goodman and Edmund Blair)