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US President Donald Trump’s warning to North Korea has given gold momentum; investors are also awaiting US inflation data.
The gold price rose late Tuesday (August 8) after US President Donald Trump warned that North Korea’s threats to the US “will be met with fire and fury.”
Trump’s comments came after reports that North Korea has spurned a new round of sanctions approved by the UN Security Council. The country has pledged to press forward with the development of nuclear weapons that could reach the US mainland.
As of 5:00 p.m. EST on Tuesday, gold was sitting at $1,260.90 per ounce; the yellow metal soared to a seven-week high midway through last week.
Aside from geopolitical concerns, gold-focused investors are awaiting US inflation data set to be released on Friday (August 8). They will be looking for further clues about interest rate hikes from the US Federal Reserve later this year.
“Markets are in sleep mode,” Hussein Sayed, a strategist at Forextime, a retail currency broker, told Bloomberg. “Limited news flow is what can be blamed for the narrow trading ranges, but expect this to change as we get closer to Friday’s U.S. CPI release.”
If Friday’s data points to strong US inflation, it could raise concerns about further interest rate increases. That is bad news for gold, as higher rates tend to put pressure on non-yielding bullion.
“Ahead of the U.S. inflation numbers gold will likely trade sideways until there’s more direction,” said Fawad Razaqzada, an analyst at FOREX.com.
Meanwhile, the US dollar index has been surging since last Friday (August 4), when a better-than-expected US jobs report boosted the greenback. The release hurt gold demand, as a stronger dollar makes commodities more expensive for buyers using weaker currencies.
But according to ICBC Standard Bank‘s Yuichi Ikemizu, the dollar is still weak and on a downtrend, which could help gold prices inch higher in the short term.
“There aren’t many players in the market, nor is there much incentive [for prices] to move right now, so I think it’s going to be very quiet for the rest of the month,” he commented.
That said, analysts remain bullish on gold for the rest of the year. In a recent interview with the Investing News Network, Adrian Day of Adrian Day Asset Management explained why it’s is a very good time to invest in gold. Click here to listen to the interview.
Similarly, Andy Schectman, president of Miles Franklin, shared why he thinks the market is setting up for a major gold uptake. Click here to listen to the interview.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
