· Gold prices extended their climb into a third session in a row Tuesday, settling at the highest level in almost a year, as a North Korean missile launch over Japan’s airspace rekindled geopolitical tensions in the region and sparked a flight to haven assets.
· Spot gold XAU= was up 0.4 percent at $1,314.52 an ounce by 1:54 p.m. EDT (1754 GMT), after touching $1,325.9399, its highest since Nov. 9.
· Gold for December delivery GCZ7, -0.22% rose $3.60, or 0.3%, to settle at $1,318.90 an ounce. It marked its highest settlement value since Sept. 29 of last year, but finished off the day’s high of $1,331.90, paring gains in the wake of upbeat economic data. U.S. consumer confidence strengthened in August to the second highest level since late 2000.
· The advance came after North Korea fired a ballistic missile across northern Japan, in what Japanese Prime Minister Shinzo Abe called an “unprecedented, grave and serious threat that seriously damages peace and security in the region.”
· Tensions between Pyongyang and the U.S. and its allies—including Japan—have been running high most of the summer, stoking fears of a potential nuclear clash. President Donald Trump has previously said the U.S. would react with “fire and fury” if Pyongyang stepped up threats against the U.S. and its allies.
· “There is increasing expectations for President Trump to counter react to the North Korean aggression, which may further propel the prices upwards,” said Mihir Kapadia, CEO at Sun Global Investments, in a note.
· Gold prices had already kicked off the week with sharp gains Monday as the dollar slumped amid Hurricane Harvey’s destruction in Texas. The greenback was little changed Tuesday as gold prices settled, but the ICE Dollar index DXY, +0.00% a gauge of the buck against a half-dozen currencies, fell earlier to trade at its lowest levels since January 2015. A weaker greenback tends to boost commodities tied to the currency such as gold, as it becomes cheaper to buy for other currency holders.
· The dollar has been hit hard recently, falling sharply Friday after Janet Yellen, the Federal Reserve Chairwoman, “remained tight-lipped about the future path of U.S. monetary policy at the Jackson Hole Symposium,” said Fawad Razaqzada, technical analyst at Forex.com.
· “This triggered speculation that the Fed may delay raising rates again until next year,” he said. Also, “if the economic costs of Hurricane Harvey ... turn out to be unexpectedly high, then the Fed may have to be even more patient in normalising monetary policy.”
“This is good news for gold, for not only is it benefiting from the current “risk-off” trade but a weaker dollar too,” said Razaqzada.
· December silver SIZ7, -0.15% turned lower, losing 1.3 cents, or less than 0.1%, to $17.516 an ounce, after a gain of 2.3% Monday.
Reference: Market Watch, Reuters
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