Weekly Round-Up: Gold Price Recovers from Four-week Low

Heightened geopolitical tensions between the US and North Korea pushed the gold price up on Friday, but it is still below $1,300 per ounce.

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The gold price rose on Friday (September 22) after taking a fall earlier this week.  

Safe-haven demand caused by heightened tensions between the US and North Korea pushed the yellow metal up to $1,294.49 per ounce as of 12:00 p.m. EST Friday morning. It hit a four-week low of $1,287.61 during the previous session.

After US President Donald Trump vowed to destroy North Korea if provoked, the country said it might test a hydrogen bomb over the Pacific Ocean. North Korean leader Kim Jong Un called Trump “mentally deranged” and promised to make him pay for his threats.

“Gold took quite a beating after the U.S. Federal Reserve meeting but now the market got the news about North Korea and now investors are moving back in gold,” Danske Bank (CPH:DANSKE) analyst Jens Pedersen told Reuters.

The Fed wrapped up a two-day meeting on Wednesday (September 20). The central bank did not raise interest rates, but indicated that it plans to do so one more time in 2017 and three times in 2018.

The gold price retreated under the $1,300 mark on the back of the news, and many market watchers anticipate continued pressure for the precious metal in the coming months. When interest rates are higher, the investment appeal of non-yielding assets like gold tends to decrease.

Looking over to silver, the white metal saw similar price action this week. Like gold, it retreated after the Fed meeting, but saw its performance improve slightly on Friday. As of 12:00 p.m. EST that day silver was changing hands at $16.93 per ounce.

Copper also suffered after the central bank met this week, sinking to a one-month low of $6,427.50 per tonne on Thursday (September 21). Experts have varied opinions on how the base metal will fare moving forward, and some have suggested that its rally this summer was “overhyped.”

Finally, oil prices put on a mixed performance on Friday before hanging onto a weekly gain. According to MarketWatch, West Texas Intermediate crude for November delivery rose a cent to reach $50.56 per barrel on the NYMEX, while November Brent crude closed at $56.81 per barrel on the ICE Futures Europe exchange — that’s its highest level since late February.

In a Friday meeting in Vienna, OPEC and other major oil producers said that their efforts to clear the global oil supply glut are seeing success. OPEC and its allies have reduced their output by about 1.8 million barrels a day since the start of the year, and reiterated at this week’s meeting that they are considering extending the deal beyond its March 2018 expiry date.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

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