Gold hits one-month high on N.Korea missile test
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.
Dealers said the market was expected to trade in a broad range, with the U.S. 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 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 fell to $1,225/1,231 an ounce from $1,229/1,234 in London overnight, while palladium was $1 up at $323/328 an ounce. Silver 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.
Source: Reuters
