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Gold ends at 2-month high as North Korea tension lifts haven assets

Gold ends at 2-month high as North Korea tension lifts haven assets

Thu Aug 10 2017

 

Gold prices finished at their highest level in more than two months Thursday, adding to the previous session’s sharp daily rise since the middle of May, as simmering North Korean tensions underpinned haven investments.

 

December gold GCZ7, +0.11% finished up $10.80, or 0.8%, at $1,290.10 an ounce, marking the highest level for a most-active contract since June 7, when the metal finished at $1,293.20 an ounce.

 

“Traders have finally started to wake up to the risks out there, with North Korea acting as the initial catalyst this week,” Colin Cieszynski, chief market strategist at CMC Markets, told MarketWatch.

 

“With a big battle over the budget and debt ceiling and other potential flare-ups, gold may break out of the doldrums and become more active in the coming weeks,” he said.

 

Still, prices for gold remain below $1,300 an ounce “because so far there has been a lot of talk, but little action,” said Cieszynski. “It could take an actual negative event to send gold higher. If $1,300 resistance gives way, it could open the floodgates.”

 

September silver SIU7, -0.09%  also climbed, settling up 20.20 cents, or 1.2%, to $17.065 an ounce, also representing its best closing level in about two months. The white metal’s nearly 3% rise Wednesday has helped it to post its highest settlement Thursday since June 14 when it hit $17.14 an ounce.

 

Gold added to early gains, and the dollar pulled back, following the release of U.S. data showing a cooler reading for inflation at the wholesale level. Prices actually retreated in July for the first time in almost a year. The data could slow Federal Reserve interest-rate hikes, presumably hurting the dollar while buoying gold.

 

“Risk aversion is once again the name of the game on Thursday, as geopolitical tensions mount and investors head for cover in the traditional safe havens. Standard safe haven instruments are still being preferred at this point, with the yen well bid against its peers and gold a little higher after seeing strong gains on Wednesday, while equities are getting no love,” said Craig Erlam, senior market analyst, at Oanda.

 

Geopolitical tension persisted after a North Korean army commander said “sound dialogue is not possible” with U.S. President Donald Trump and “only absolute force can work on him,” according to state media. North Korea also laid out detailed plans of how it would launch a missile strike on U.S. military bases in Guam.

 

“If war erupts, it’s impossible to say where it goes from there,” said Michael Armbruster, managing partner at brokerage firm Altavest.

 

“Too many past administrations have kicked the can down the road and we’ve finally come to the end of the road where North Korea has nuclear weapons and the means to deliver them,” he said. “Too much uncertainty likely means gold goes up from here.”

 

The U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, -0.02% was trading down by less than 0.1%, after earlier slim gains. The dollar gauge tracks the buck’s value against a half-dozen rivals. A flat or softening greenback can add to bullish momentum for commodities linked to the currency, making them less expensive to buyers using weaker currencies to purchase gold.

 

Elsewhere on Comex, September copper HGU7, -0.84% which hit its highest level in about two years on earlier this week, was down 2.4 cents, or 0.8%, at $2.9030 a pound. October platinum rose $9.80, or 1%, to $985.90 an ounce, while September palladium PAU7, +0.30% rose $5.20, or 0.6%, to $897.05 an ounce.

 

In exchange-traded funds, the SPDR Gold Trust GLD, +0.74% was up 0.7%, while the mining-company focused VanEck Vectors Gold Miners ETF GDX, +2.12% rose 1.7%. Silver-oriented iShares Silver Trust SLV, +1.25% gained 1.1%.

 

Source: http://www.marketwatch.com/