Gold prices shot up on Tuesday to their highest in nearly a year as demand for safe-haven assets remained strong in the wake of North Korea’s most powerful nuclear test to date.
Gold futures led the precious metals market higher on Monday after North Korea said it had successfully tested a ‘hydrogen bomb’ that can be fitted on a long range missile, and the US warned that any threat to itself and its allies would be met with a “massive military response.”
Geopolitical risks tend to boost demand for safe havens such as gold, which is considered a good store of value during volatility in other markets.
Comex gold futures jumped $10.30, or around 0.8%, to $1,340.77 a troy ounce by 2:50AM ET, after touching its best level since September 27, 2016 at $1,345.50 earlier. Currently, it is up 0.5% to $1,337.58 at 9:33 AM ET.
US-North Korea Tensions
Demand for the safe-haven metal stayed strong after North Korea conducted its sixth and most powerful nuclear test to date on Sunday, which it said was a successful detonation of an advanced hydrogen bomb.
Pyongyang called the test a complete success, with a greater yield than previous tests and no adverse impact on the environment.
Adding to concern on the Korean peninsula, South Korea’s Defense Ministry said Monday that Pyongyang is making preparations for the possible launch of another intercontinental ballistic missile. Many experts have been preparing for a weapons test around September 9, when North Korea marks the anniversary of its foundation in 1948.
In response, the U.S. told the United Nations on Monday that Pyongyang was “begging for war,” before urging the 15-member Security Council to respond with the “strongest possible measures” against the isolated regime.
The escalating tensions prompted investors to dump assets seen as riskier, such as stocks and high yielding currencies, and flock to traditional safe-haven assets like the yen, sovereign bonds, and bullion.
Other Precious Metals
Silver rose 0.8% to $18.08 an ounce, earlier touching its highest since late April at $17.90 an ounce.
Platinum gained 0.2% to $1,012.20. It had previously marked its best since early March at $1,014.70.
Palladium held 0.8% to $980.55, after earlier reaching its highest since February 2001 at $1,001.
Meanwhile, copper futures rallied roughly 1.3%, to a more than three-year high of $3.158 a pound, boosted by growing confidence in the global economy.
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