Price of gold surges to five-month high

Reuters

Spot gold was up 1.5 per cent at $US1273.44 per ounce by 3.10pm on Tuesday in NY, after hitting a fresh high since Novembrer 10 at the session high of $US1275.16.

Tarnishing an otherwise brightening outlook for global growth, tensions continued over the Korean peninsula and the Middle East, while worries about the upcoming French presidential election persisted.

Gold pulled back from an earlier five-month high on Thursday as the dollar clawed back some of the ground it lost after U.S. President Donald Trump said the U.S. currency was too strong.

U.S. gold futures were up 0.9 per cent at $1,290.10.

"The further deterioration in the USA relationship with Russian Federation and North Korea this week has supported the prices of precious metals", Capital Economics said in a weekly note.

Gold tends to gain when rate hike expectations recede because lower rates reduce the opportunity cost of holding non-yielding bullion.

Trump said on Thursday that North Korea is a problem that "will be taken care of", as China urged caution and speculation rose that Pyongyang might be on the verge of a sixth nuclear test.

The Japanese yen continues to appreciate against the dollar this morning, as the two major flashpoints on the world stage both involve USA military action, or the threat thereof.

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But, even as the metal has been breaking out recently, many related stocks continue to trade below their February highs, and a handful of the big names are stuck between their 50- and 200-day moving averages.

"Geopolitical events (this time concerning North Korea) have seen gold break through $US1260", Metals Focus said in a note.

"The safe-haven effect is clearly in play once again ahead of the Easter holiday with volumes in both spot and options well above average", he said.

Geopolitical fears, in particular, of a new weapons test by North Korea, worked their way into the picture, as a US carrier group sailed towards the region.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.50 per cent to 842.41 tonnes on Tuesday.

Spot silver was up 0.1 percent at $18.50, after hitting a 5-month high of $18.56.

However, by 4:53pm BST, late into the European afternoon, much of the gains had been shed with the Brent front month futures contract down 0.26% or 22 cents at $55.64 per barrel, slipping below overnight levels above $56. Platinum for July delivery fell 1.6 dollar, or 0.17 percent, to close at 967.90 dollars per ounce.

Palladium slipped 0.2 percent to $799.45 after touching its weakest in more than a week at $784.72 in the previous session.

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