Rekindled North Korea worries drive up gold, other precious metals
GOLD prices climbed to their highest in more than a week on Monday as renewed concerns over North Korea’s nuclear ambitions stoked safe-haven demand for the precious metal and weighed on the dollar.
Spot gold was up 0.50% to $1,282.39 an ounce (/oz) by 0357 GMT, after earlier touching its highest since Sept. 29, while US gold futures for December delivery gained 0.80% to $1,284.80/oz.
The dollar held steady against the yen on Monday, having retreated from 12-week highs set last week, due to a renewed focus on geopolitical risks amid concerns that North Korea may be preparing another missile test.
“This is really arbitrage driven, and the Chinese having come back and trading the difference between the arb,” a Hong Kongbased trader said, adding that comments over the weekend concerning North Korea provided support for gold.
Geopolitical risks can boost demand for safe- haven assets such as gold and the Japanese yen.
North Korea’s leader said his nuclear weapons were a “powerful deterrent” that guaranteed its sovereignty, hours after US President Donald Trump said “only one thing will work” in dealing with the isolated country.
“If gold continues this movement, I think you’ll run into some resistance here. $1,285 looks top at the moment. I’m looking for strength to buy into and we might get that in the next few days,” the trader said.
Meanwhile, Asian shares rose on Monday and Chinese shares rallied after a week-long break, as optimism on global growth remained.
US FACTORS
US employment fell in September for the first time in seven years due to impacts from hurricanes Harvey and Irma.
Chocking up employment losses last month to the temporary hit of a severe hurricane season, and reiterating expectations that inflation will firm, Federal Reserve policy makers on Friday signaled they continue to see gradual US interest-rate hikes ahead.
Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on the greenback- denominated, nonyielding bullion.
Spot gold may rise to $ 1,299 per ounce as it has broken a resistance at $1,281, Reuters technicals analyst Wang Tao said.
Speculators reduced their net long positions in COMEX gold and silver contracts for the third straight week, in the week to Oct. 3, US Commodity Futures Trading Commission data showed on Friday.
In other metals, silver was up 0.80% at $16.91 an ounce and was near its highest in nearly two weeks.
Platinum and palladium were both up nearly 0.40%, at $916.24 an ounce and $923.50 an ounce, respectively. —