Gold hits five-month peak on rising geopolitical worries

20 April, 2017, 06:11 | Author: Glen Fletcher
  • Gold hits five-month high after Trump's dollar comments

"The dollar is down and European equity markets are also down which moves against gold because it's a safe-haven asset", said Carsten Menke, an analyst at Julius Baer, adding that the market was also beginning to discount President Trump's influence on U.S. policy. The U.S. bombed Syria and Islamic State positions in a remote area of Afghanistan this month, and tension ratcheted up at the weekend after Trump was said to be willing to consider "kinetic" military action, including a sudden strike on North Korea, after a ballistic missile launch by the country failed.

Gold closed at 59,466.67 won ($52.07) per gram on the Korean market Friday, hitting an eight-month high.

"Gold looks fairly attractive at the current juncture as a safe haven bet with geopolitical tensions on a rise and concerns ahead of French elections", said Sugandha Sachdeva, head of metals, energy & currency research at Religare Securities.

Data showing China's economy grew more quickly than expected in the first quarter helped to offset some geopolitical worries. For the first time since the Syrian Civil War began, the US directly bombed a government target, escalating its role in the conflict.

The Dow Jones Industrial Average was up 67.03 points, or 0.33 percent, to 20,520.28, the S&P 500 gained 5.64 points, or 0.24 percent, to 2,334.59 and the Nasdaq Composite added 15.55 points, or 0.27 percent, to 5,820.70.

"People want to be focused on earnings and how the economy is doing", said Robert Pavlik, chief market strategist at Boston Private Wealth in NY.

Financial shares rallied after the November 8 election on hopes of deregulation under Trump and expectations of higher interest rates.

The dollar index, which tracks the greenback against a basket of six rival currencies, edged up 0.2% to 99.62, pulling away from Tuesday's low of 99.36, its deepest trough since March 28. The 10-year U.S. Treasury yield was at 2.23 percent.

"As (gold) didn't manage to get through $US1,300 and due to light volumes during (holiday-related) European hours, gold consolidated until weaker US economic data gave the yellow metal another push", said Giovanni Staunovo, commodity analyst for UBS Wealth Management.

The United States, its allies and China are working together on a range of responses to North Korea's latest failed ballistic missile test, Trump's national security adviser said on Sunday, citing what he called an global consensus to act.

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