Failed North Korean missile test pushes gold further up despite dollar rally
Continuing its trend from last week, the gold price set a new five-month high over the easter weekend amid ongoing political tensions.
Spot gold was up 0.05% at $1,285.86 per ounce last night, with early November’s $1,295.42 the current high point to beat, according to CityAM. The paper also reported that the most active US gold futures for June delivery rose 0.3% to $1,292.10.
Last Sunday North Korea failed to test its latest missile, the rocket in question exploding on launch. This comes following a week of tempestuous geopolitics in the region and the Trump administration’s hardening of its stance towards Pyongyang. The launch marks a very real, physical manifestation of the verbal exchange and the possibility of conflict.
“Gold will likely retain a measure of strength heading into the French elections in about one week’s time, while ongoing tensions in North Korea should also keep the markets rather nervous,” said INTL FCStone analyst Edward Meir in CityAM.
Real economic factors that kept a lid on the gold price include a recovery for both the dollar and 10-year US treasury yields, which had both been lagging. US stocks also reversed their course, having previously made three straight days of losses.
CityAM quoted Phillip Streible, senior commodities broker for RJO futures in Chicago, who echoed Janet Yellen’s sentiment on monetary policy: “the Fed is still going to raise rates. The cloud lingers over gold,” he said.
Despite predictions of £1300 for the year, some aren’t so sure about the prospect for the gold price in 2017. A note from French investment and bullion bank Natixis suggested there might be an “end of the golden age”, as 10-year US yield touched 30-month highs above 2.60% at an early point in the year, according to Bullionvault.
Bullionvault went on to quote Bernand Dadah, a metals analyst, who forecast his average gold price forecast for the year at $1,150, citing pressure from rate hikes from the Fed, and a shift to QE tapering from the European Central Bank in September.
September also marks the German Federal elections, where Angela Merkel’s position will be challenged.
Photo credit: “Martin”. https://www.flickr.com/photos/mtshaw/. edited with TVScanline
Link to this article: : http://www.goldmadesimplenews.com/gold/failed-north-korean-missile-test-pushes-gold-further-up-despite-dollar-rally-13076/