Gold Prices Hit 2-Month Highs, Defensive Demand Continues
New York (Aug 10) There were further tensions surrounding North Korea on Thursday with the Pyongyang regime claiming that missiles which could be used to target the Pacific island of Guam would be ready to launch by mid-August.
Overall risk conditions remained fragile, although there was no further aggressive rhetoric from US President Trump.
Markets remained concerned over the risk of a US first-strike against North Korean nuclear facilities.
European equity markets continued to lose ground on Thursday which provided further net support to gold, especially with bond yields tending to drift lower.
Overall, gold continued to edge higher to the $1,280 per ounce area in European trading.
The US producer prices data was slightly below consensus forecasts with both headline and core prices declining 0.1% on the month. The data suggested little sign of inflationary pressure within the economy.
Jobless claims increased to 244,000 in the latest week, although continuing claims declined.
The dollar overall drifted weaker which provided further support to gold prices.
Equity markets had traded with a soft tone in Europe and there was a sharp increase in selling pressure in New York with the S&P 500 index declining by close to 1.0%.
The decline in equity markets and a dip in US bond yields triggered fresh demand for precious metals and gold pushed to fresh 2-month highs around $1,288.
Risk conditions will continue to have an important impact in the short term with gold gaining further support if there is no recovery in risk appetite.
The latest US CPI data will also be an important market focus on Friday and there will be a constant threat of choppy trading conditions given a lack of liquidity. There is the potential for strong resistance on any approach to the $1,300 per ounce area.
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