Gold drops as North Korea tensions subside - for now

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North American stock market indexes jumped Monday after hurricane Irma weakened without causing as much damage as feared, while the loonie slowed its pace of recent gains.

The S&P 500 finished at a fresh record on Monday (Sep 11) as USA stocks rallied after Hurricane Irma avoided a worst-case scenario, yielding less damage than feared. Bloomberg's dollar index rose for the first time in eight days and 10-year Treasury yields climbed past 2.10 percent.

The Dow Jones Industrials raced ahead 259.58 points, or 1.2%, to 22,057.37, with Goldman Sachs, Apple, 3M and insurer Travelers Cos. contributing the most to the gains.

Alamos Gold Inc tumbled 12.9 percent to C$8.93 after the company said it will buy smaller rival Richmont Mines in an all-stock deal valued at about C$905 million.

In other sectors, AstraZeneca's shares were among the biggest gainers on the FTSE, rising 2.1 percent after reassuring results from two of its lung cancer drugs. Travel booking site Priceline rose 30.29 dollars, or 1.6%, to 1,868.86 dollars.

The dollar added 0.5 percent against its perceived safe-haven Japanese counterpart to 108.42 yen JPY= , moving away from a 10-month nadir of 107.32 yen touched on Friday.

Instead North Korea observed the 69th anniversary of its founding on Saturday with a celebration honouring the scientists behind the massive nuclear test it conducted last week.

Insurers jumped in markets from Europe to Florida, cruise-ship operators rallied and oil advanced amid signs that predictions about Hurricane Irma's wrath were overdone. Futures had risen to 1.54 dollars a pound on Friday from 1.30 dollars at the end of August and slipped to 1.51 dollars a pound on Monday.

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Positioning against the dollar has ballooned to record levels in recent months as soft economic data and an impending change of guard at the Federal Reserve has made markets extend bets that USA interest rates are unlikely to go up any time soon.

The dollar gained while gold prices fell, as did prices of benchmark German and U.S. Treasury debt.

That wiped out a month of losses linked to global tensions as well as worries about the lingering effects of Hurricanes Harvey and Irma, which are expected to slow the USA economy over the next few months. But shares of the company, which also makes ingredients, fell 1.2%.

Spot gold may break a support at $1,332 per ounce and fall more to the next support at $1,317, said Reuters technical analyst Wang Tao. The euro slid to 1.1962 dollars from 1.12028 dollars.

USA inflation data is due on Thursday and recent comments from Fed policymakers show a split on the outlook for inflation and how that will play out for future interest rate increases.

In a typical risk-on move, the United States dollar strengthened by 1.03% verus the yen to 108.94 with the December gold contract on COMEX off by 0.86% at $1,339.50/oz.

Dollar-yen USDJPY, +0.73% changed hands at ¥108.55 Monday compared to ¥107.84 late Friday in NY.

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