Gold breaks $1,300 barrier
london — Gold jumped to its highest since November on Tuesday as investors bought bullion as insurance against falling prices of other assets after North Korea tested a missile over Japan.
“Funds and traders are filling their boots with gold at the moment and so far that’s justified,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“No matter where you look you can’t point your finger at anything that’s gold negative. Stocks are coming off hard, the dollar has weakened and now also against the yen, which has been the missing link, while bond yields are also taking a beating.”
Spot gold, which rose for a third straight session, was up 1.1 per cent at $1,323.87 an ounce by 1225GMT after touching $1,325.94, its highest since November 9. US gold futures for December delivery rose 1.1 per cent to $1,329.30. The next targets for gold are $1,337 an ounce, based on the November high after the US election, and around $1,375, last year’s peak after Britain’s vote to leave the European Union, Hansen said.
Spot gold had climbed by 1.4 percent on Monday, breaking through key resistance and marking its biggest one-day percentage rise since mid-May after comments by the head of the European Central Bank boosted the euro and hit the dollar. Gains were then extended after North Korea fired a ballistic missile over Japan’s northern Hokkaido island into the sea early on Tuesday in a sharp escalation of tensions on the Korean peninsula.
“North Korea’s missiles over the Japanese Hokkaido islands obviously fuelled buying for the flight to safety,” said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank. Geopolitical risks can boost demand for safe-haven assets such as gold, which is considered a good store of value during volatility in other markets.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 1.1 per cent to 814.36 tonnes on Monday. Other precious metals benefited from the tailwinds, with silver rising 0.9 per cent to $17.57 after touching $17.63, its highest since June 8. — Reuters