Geopolitical risks cause surge in gold prices, transactions

Posted April 20, 2017

Gold prices hit a five-month high on Monday (April 17) as the USA dollar weakened with investors taking refuge in safe-haven assets in the wake of rising geopolitical tensions over North Korea.

United States gold futures were down 0.5 percent at $1,285.50.

Gold prices in the global market have also been rising, as the USA military's bombardment of Afghanistan has fanned fears in the Middle East and the Korean Peninsula.

The most active gold contract for June delivery fell 10.7 US dollars, or 0.83 percent, to settle at 1,283.40 dollars per ounce.

Overnight, gold prices fell on Wednesday, as demand for the precious metal eased, after the dollar bounced off session lows, despite ongoing geopolitical tensions over North Korea. The rising gold prices is considered to be implication of political escalation around North Korea. North Korea attempted to test a missile on Sunday, but it exploded shortly after launch. "We see the yen continuing to strengthen, and a strong yen and strong gold have gone hand in hand since November", Saxo Bank's head of commodity strategy Ole Hansen said.

New York-listed SPDR Gold Shares ETF, the world's biggest gold-backed exchange-traded fund, said its holdings rose more than six tonnes on Thursday, the biggest one-day inflow in a month.

Meanwhile, uncertainties over Trump's policy toward North Korea have been growing.

"Gold is trading with an upward bias with the US$1,300 level just in sight".

"This weekend's French Presidential first round elections are looking increasingly murky, and this will most likely fan safe-haven fires", said Jeffrey Halley, senior market analyst at OANDA.

Platinum rose 0.3 per cent to $965.29, while palladium was up 0.5 per cent at $779.10.

Spot gold may break a support at $1,281 per ounce and fall to the next support at $1,265, following its failure to break a trendline falling from the July 11, 2016 high of $1,374.71, Reuters technical analyst Wang Tao said.

The Bloomberg Dollar Spot index fell 0.4 percent and has sunk about 4.8 percent from a high reached in January.