Geopolitical tensions between the US and North Korea boosted demand for safe-haven assets like gold this week. The US dollar was also under pressure.
The gold price hit its highest level in over a year on Friday (September 8), and was on track for a third weekly gain.
A weaker-than-expected US jobs report put the dollar under pressure and raised questions about future interest rate hikes. “Gold prices rallied as weaker-than-expected economic data provided some doubt as to the next rate hike by the Federal Reserve,” ANZ’s Daniel Hynes wrote in a note.
The US Federal Reserve will meet again on September 19 to decide whether it will raise interest rates again this year. In general, higher interest rates increase the opportunity cost of holding non-yielding bullion.
Geopolitical tensions between the US and North Korea also boosted demand for safe-haven assets like gold this week.
“Lingering North Korean tensions and a general U.S. dollar, sell-off propelled gold to new 2017-highs overnight. Gold continues breathing thin air at these rarified levels with the next technical target at $1,375.00,” said Jeffrey Halley, a senior market analyst at OANDA.
Other market participants expect the yellow metal to rise even in the next few months. “Gold is likely to hold its gains and could move substantially higher if the outlook for the equity market darkens,” said Michael Armbruster, managing partner at brokerage firm Altavest.
Similarly, Phil Streible, senior market strategist at Chicago-based RJO Futures, told CNBC that gold will likely rise to $1,400 per ounce.
“The flight to quality as a result of North Korea’s [self-claimed] detonation of a hydrogen bomb has caused investors to flee riskier assets and go into your safe haven asset like the gold market,” he said. As of 1:00 p.m. EST on Friday, the gold price was at $1,347.11.
Looking over to silver, the white metal touched a four-and-a-half-month high this week, trading above $18 per ounce. As of 1:00 p.m. EST on Friday, the white metal was $18.04.
Palladium was up 0.6 percent on Friday, trading at $961 per ounce, while platinum was up 0.3 percent, at $1,018 per ounce.
On the base metals side, copper prices hit their highest level in three years this week, fueled by forecasts of strong demand in top-consumer China and falling inventories. Market participants are now wondering if prices will break $7,000 per tonne. On Friday, LME copper closed down 3 percent, at $6,693.
Lastly, spot oil edged lower on Friday as domestic refineries saw a slow recovery from flooding after Hurricane Harvey.
October West Texas Intermediate crude fell 1.9 percent, to $48.14 a barrel, on the New York Mercantile Exchange, while Brent crude for November delivery on London’s ICE Futures Exchange lost 0.8 percent to reach $54.05 a barrel.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.