Gold prices rose in Asia as North Korea warned it could soon conduct a new test, likely of an ICBM, on its founding anniversary of Sept. 9, putting the U.S. and allies in the position of a response that could include an attempt to shoot it down. Overnight, gold prices surged on Tuesday, following a slump in the dollar on the back of rising geopolitical uncertainty and falling expectations that the Federal Reserve will hike rates for a third time later this year. Gold prices jumped to near one-year highs as geopolitical uncertainty remained front and center, fuelling safe-haven demand in the wake of North Korea’s largest and most powerful nuclear test over the weekend. Also adding to the rally in gold prices were comments from Federal Reserve Governor Lael Brainard urging the U.S. central bank to delay raising interest rates until the trend of slowing inflation improved. Gold is sensitive to moves lower in both bond yields and the U.S. dollar – A lower dollar makes gold cheaper for holders of foreign currency while a fall in U.S. rates, reduce the opportunity cost of holding non-yielding assets such as bullion. Gold’s rally to a one-year peak comes amid a surge in buying activity among money manager after net bullish bets on gold rose to 231,000, the highest in eleven-months, according to a report from the Commodity Futures Trading Commission (CFTC) on Friday.
Source: Investing
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