Gold price heads for strong weekly gain as stock market exit persists

London (Aug 11)  Precious metals headed for strong weekly gains Friday, extending prices that were already at their highest level in more than two months as simmering North Korean tensions slammed stocks and other assets perceived as risky.

Gold gained as U.S. stocks were headed toward their worst weekly performance since November.

“Risk-off mode is in full swing with investors piling their bets in Japanese yen, the Swiss Franc and the yellow metal. Profit taking is the major theme when it comes to the equity market,” said Naeem Aslam, analyst at Think Markets.

In repsonse, December gold GCZ7, +0.27% rose $3.60, or 0.3%, at $1,293.70 an ounce early Friday. The contract closed at $1,290.10 an ounce Thursday, marking the highest level for a most-active contract since June 7, when the metal finished at $1,293.20. The metal is on track for a roughly 2.3% gain for the week.

September silver SIU7, +0.23%  rose 7 cents, or 0.4%, to $17.13 an ounce. Its Thursday close also marked the best finish in about two months. The white metal looked headed for an over 5% gain this week.

Geopolitical tension persisted after a North Korean army commander this week said “sound dialogue is not possible” with U.S. President Donald Trump and “only absolute force can work on him,” according to state media. North Korea also laid out detailed plans of how it would launch a missile strike on U.S. military bases in Guam. Late Thursday, Trump said his threat to unleash “fire and fury” on North Korea “maybe wasn’t tough enough.”

Ray Dalio, chairman and chief investment officer at Bridgewater Associates, on Thursday urged investors to hedge their risks with gold amid rising geopolitical tensions.

Dalio observed that the dangers lurking under the surface appear to be more political than economic, making them difficult to gauge.

But the economy could come back into play as investors will get an update on consumer price inflation Friday morning, watched for its influence on the Federal Reserve’s interest-rate policy. It follows a report Thursday that revealed cooling producer-level inflation. Inflation’s persistence below the Fed’s 2% remains a key point of debate on the interest rate-setting panel, with some members believing low inflation is transitory and others not yet convinced it’s time to continue with rate hikes until the inflation risk becomes more apparent.

The U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, +0.00% was trading down by less than 0.1% Friday. The dollar gauge tracks the buck’s value against a half-dozen rivals. A flat or softening greenback can add to bullish momentum for commodities linked to the currency, making them less expensive to buyers using weaker currencies to purchase gold. Higher rates tend to be dollar-positive and sour demand for nonyielding gold in favor of interest-bearing assets.

Elsewhere on Comex, September copper HGU7, -0.31% which hit its highest level in about two years on earlier this week, was down 1 cent, or 0.5%, at $2.8895 a pound. October platinum rose $9.80, or 1%, to $985.90 an ounce, while September palladium PAU7, +0.36% rose $2.85, or 0.3%, to $899.90 an ounce.

In exchange-traded funds, the SPDR Gold Trust GLD, +0.16% was up 0.2% premarket, while the mining-company focused VanEck Vectors Gold Miners ETF GDX, +2.39% rose 0.4%. Silver-oriented iShares Silver Trust SLV, +1.25% gained 0.2%.