Gold prices are holding on to yesterday’s $20 in gains this morning, as tensions on the Korean peninsula ratchet ever-higher. North Korean dictator Kim Jung Un and US president Donald Trump continue to taunt each other in press releases and on Twitter, as a US Navy carrier battle group heads to the eastern coast of Korea. Gold is now trading at its highest level since before Trump’s victory in last November’s presidential election.
Gold spiked at the New York open this morning to near $1,279 an ounce. Growing unease over not only the US’s extremely aggressive policy towards North Korea, but also the sudden animosity between Russia and the US over the Assad regime in Syria, is keeping anxiety high and safe havens rising. Momentum traders, lured by gold’s ability to hold on to yesterday’s big rally as well as its close above its 200-day moving average, are entering the market and helping support higher prices.
Silver prices are also holding tight on yesterday’s rally, which saw the white metal gain 2.2% on the day. The platinum group metals, on the other hand, are seeing selling pressure after Tuesday’s rally – especially palladium, which is used in catalytic converters for gasoline-powered vehicles. This could be profit-taking, or perhaps jitters over the possibility that China will enact trade sanctions against US automakers for any unilaterally aggressive moves by the Trump Administration against North Korea. The last thing China needs is a wave of North Korean refugees flooding southern China as Kim Jung Un threatens to nuke Seoul or Tokyo.
The Japanese yen continues to appreciate against the dollar this morning, as the two major flashpoints on the world stage both involve US military action, or the threat thereof. The weaker dollar is giving respite to the euro and British pound as well.
Treasuries continue to be well-bid on safe haven demand, as the yield on the benchmark 10-year note holds at a five-month low beneath 2.3%.
Christopher Vecchio at Daily FX warns investors “The fact that we’ve seen Gold, the Yen, and US yields all move in tandem shouldn’t be taken lightly.”
Global sentiment wasn’t helped this morning, as US Secretary of State Rex Tillerson met with a hostile reception in Moscow. Russian airwaves rang with condemnation of Trump’s missile attack on a Syrian government airfield, said to have been the staging area for a poison gas attack against civilians. Russia has been a long-time ally of the Assads of Syria, even stationing Russian attack aircraft in-country to bomb rebel groups. Russian president Vladimir Putin, in a television interview broadcast as Secretary Tillerson sat down with his Russian counterpart, said that he believed that the gas attack was a “false flag” operation to frame Assad, and give Trump an excuse to blow up his aircraft.
On Wall St, stocks opened lower after paring losses Tuesday to finish just below unchanged.
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