Gold’s safe-haven lift fades, leaving weekly retreat intact
London (Sept 15) Gold prices on Friday gave up the initial pop higher that followed another missile test in North Korea, leaving the precious metal on track to end with a weekly loss and marking a solid retreat from the one-year highs scored just last Friday.
Gold was churning amid a slim decline for the dollar and a recovery for stock indicators from their immediate reaction to North Korea. Still, gold remains underpinned by geopolitical tensions on the Korean Peninsula and as a reported terrorist attack using explosives ripped through a London Underground line on Friday, injuring more than a dozen people.
The latest headlines out of Asia “further increases geopolitical tensions in the region, which had abated somewhat of late. Gold is thus in demand as a safe haven,” said Carsten Fritsch and the commodities research team at Commerzbank, in a note.
But monetary policy factors remain at work as well.
“Yesterday saw [spot] gold dip briefly to a two-week low of $1,315 following the publication of U.S. inflation figures that were somewhat higher than expected,” Fritsch said. “That said, this has done virtually nothing to change the market’s rate-hike expectations” that put moderate odds on another hike yet this year.
Gold for December delivery GCZ7, -0.18% was recently down $1.30, or 0.1%, to $1,328.00 an ounce. Futures had climbed as high as $1,338.20 Friday. The eventual pullback takes the contract back near its lowest levels so far for September, according to FactSet Data.
The retreat in gold this week—it’s looking at a roughly 1.8% drop for the week—followed its finish last Friday at its highest since Sept. 6, 2016.
In other early Friday action, the SPDR Gold Shares ETF GLD, +0.44% was trading 0.2% higher.
The ICE U.S. Dollar Index DXY, -0.27% was down 0.1%, while stocks steadied after earlier declines. Gold tends to move inversely to both the dollar and stocks.
North Korea fired a missile over Japan early Friday local time for the second time in a month, defying rising international efforts to force it to abandon course. In a rare move, South Korea responded to the launch by immediately conducting a simulated strike of the North Korean launch site, an air base near Pyongyang. In Japan, alerts were sent to smartphones of people living in areas where the missile was projected to pass over soon after the launch was detected. No damage or injuries were reported.
The latest missile launch marked Pyongyang’s latest provocation after the United Nations Security Council on Monday unanimously adopted new sanctions against the country.
MarketWatch
