Gold climbs to 9-1/2 month high as North Korea tensions escalate
Bengaluru - 0.6% jump in spot gold rate to $1,316.90
Published: Tue 29 Aug 2017, 9:14 AM
Last updated: Tue 29 Aug 2017, 3:32 PM
Gold prices rose for a third day on Tuesday to its highest since November as mounting geopolitical tensions over a new North Korean missile launch stoked demand for safe-haven assets and weighed heavily on the dollar and equities.
Spot gold rose 0.6 per cent to $1,316.90 per ounce by 0314 GMT, after earlier touching its highest since Nov. 9 at $1,322.33.
Gold gained 1.4 per cent in the previous session in its biggest one-day percentage rise since mid-May.
US gold futures for December delivery were up 0.6 per cent to $1,322.80 per ounce.
South Korea and Japan said the missile North Korea launched early on Tuesday landed in Pacific waters east of Hokkaido after flying over the northern Japanese island, in a sharp escalation of tensions on the Korean peninsula.
"North Korea's missiles over the Japanese Hokkaido islands obviously fueled buying for the flight for safety kind of money including the Japanese yen and gold," said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.
The news saw equities plunging and the yen touching four-month highs against the dollar.
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.
Spot gold is expected to rise to $1,337 per ounce, as it has cleared a resistance at $1,312, said Reuters technical analyst Wang Tao.
"Since it broke the $1,300 resistance, I think the market really changed," Ikemizu said.
"I don't think gold will be going back to $1,200 anymore...there's more bullish factors in this market."
The metal was also drawing support from uncertainty surrounding President Donald Trump's administration in the US after his remarks raised fears of a government shutdown last week.
Trump on Monday said he hoped a government shutdown would not be necessary over his demand that the US Congress fund his proposed wall along the southern border with Mexico.
Among other precious metals, silver was unchanged at $17.42 an ounce, after touching its highest since early June at $17.56 earlier.
Platinum slipped 0.1 per cent to $985.74 an ounce, after marking its highest since early March at $994.10 earlier.
Palladium edged 0.2 per cent lower to $931.50 an ounce but was trading within sight of its 16-1/2-year high of $940.50 hit on Friday.