Gold hits one-month high on North Korea missile test

LONDON - Gold climbed to a one-month high on Wednesday on safe-haven buying after North Korea test-launched several missiles, before a rise in the dollar pared gains.

By (Reuters)

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Published: Wed 5 Jul 2006, 6:41 PM

Last updated: Sat 4 Apr 2015, 2:58 PM

Dealers said the market was expected to trade in a broad range, with the US market re-opening on Wednesday after the Independence Day holiday this week.

“It (the missiles test) encouraged some speculative activity and the market could have some steady momentum upwards,” said John Meyer, analyst at Numis Securities in London.

Spot gold XAU rose as high as $630.50 an ounce on buying from speculators, before easing to $625.70/626.70 by 0954 GMT. That was still up from $621.50/622.50 late in London on Tuesday.

The jump in the gold price helped mining shares in Australia, with Newcrest Mining Ltd NCM.AX rising 2.39 percent, gold and copper miner Oxiana OXR.AX up 2.19 percent and Lihir Gold Ltd LHG.AX gaining 3.73 percent.

North Korea test-fired missiles including a long-range weapon said to be capable of reaching Alaska, ratcheting up tensions in north Asia and drawing international condemnation.

The White House warned North Korea against more “provocative acts” and said the United States would take “all necessary measures” to protect itself and allies.

Standard Bank said in a report: “With the safe-haven factor aside, the return of New York after a four-day holiday weekend could pose interesting possibilities for gold’s direction. The immediate outlook remains firm and the New Yorkers could easily push it higher.

“A pull back in prices would not be entirely surprising, although the longer term view remains firmly bullish.”

Investors buy gold as a hedge against inflation and for future sales when holders need cash in times of trouble. Geopolitical risks elevate gold’s safe-haven appeal.

In the currency market, the dollar inched higher against the euro, making gold costlier for holders of other currencies.

Platinum XPT fell to $1,225/1,231 an ounce from $1,229/1,234 in London overnight, while palladium XPD was $1 up at $323/328 an ounce. Silver XAG firmed to $11.34/11.44 an ounce from $11.18/11.28.

In industry news, a top official of AngloGold Ashanti Ltd ANGJ.J said higher gold prices had allowed it to revive two South African projects that would deepen mines and exploit around 4.1 million more ounces of bullion.

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