September 4, 2017 / 9:31 AM / 3 months ago

PRECIOUS-Gold hits highest price in nearly a year as N.Korea tensions rise

    * Spot gold on track to reach $1,375/oz -analyst
    * Silver hits more than 4-month high, platinum 6-month high
    * Palladium pulls back from highest level since early 2001
    * GRAPHICS article:             

 (Updates prices)
    By Eric Onstad
    LONDON, Sept 4 (Reuters) - Gold prices shot up on Monday to
their highest levels in close to a year as investors bought
safe-haven assets on worries that North Korea might launch more
missiles after its sixth and largest nuclear test.
    A weaker dollar also underpinned gold, which is likely to
continue its upward momentum in the coming days, said Tom
Kendall, head of precious metals strategy at ICBC Standard Bank.
    "We've got the geopolitics and we've also got a fairly
benign interest rate environment. There's still nothing
threatening coming out of the Fed," he said, referring to the
U.S. central bank.
    Gold is highly sensitive to rising interest rates because
they increase the opportunity cost of holding non-yielding
bullion while boosting the dollar, in which gold is priced.
    Spot gold        was up 0.72 percent at $1,334.10 an ounce
by 1337 EDT (1737) GMT, having touched its strongest level since
late September at $1,339.47.
    U.S. gold futures         for December delivery were up 0.68
percent at $1,339.20.   
    South Korea said on Monday it was talking to the United
States about deploying aircraft carriers and strategic bombers
to the Korean peninsula after signs that North Korea might
launch more missiles.                
    A key target for spot gold was around $1,375, the high
reached after last year's Brexit vote, Kendall added.
    "If you've got a momentum-type trading model, things have
been pretty good," he said. "It's not looking overextended or
overbought just yet, so I think we can definitely get up to that
$1,375 level."
    Stephanie Aymes, head of technical analysis at Societe
Generale, pegged another key level for gold at $1,350/$1,356,
based on a multi-year "inverse head-and-shoulders" formation.
    "This will be a major hurdle to be watched out for," she
said in a note.
    The Japanese yen and sovereign bonds also climbed on Monday
as North Korea's nuclear test provoked a knee-jerk shift to
assets perceived as less risky while stocks markets fell.
                      
    Silver        rose 1.11 percent to $17.88 an ounce, having
hit its highest level since late April at $17.90.
    Platinum        gained 0.2 percent to $1,006.50. It had
previously marked its highest price since early March at
$1,014.70. 
    Palladium        dipped 0.41 percent to $976.50 after
touching $1,001, its highest price since February 2001.
    The metal used in catalytic converters surged 5 percent on
Friday, registering its biggest one-day jump since March 2016
after some U.S. automakers reported better-than-expected August
sales and on an expected rise in demand from Houston to replace
flood-damaged vehicles after Hurricane Harvey.
    "The way palladium has moved and the speed at which it's
moved since the beginning of August, I think it's getting to the
point at which you would be very cautious of a significant
correction back into the mid-to-low 900s over the next month or
so," Kendall said.

 (Additional reporting by Libby George in New York and Apeksha
Nair in BENGALURU; Editing by David Goodman and Paul Simao)
  

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