Gold rallied to the highest level this year after North Korea fired a ballistic missile over Japan, boosting haven demand. Palladium extended a rally and platinum rose above $1,000 an ounce.
Bullion for immediate delivery gained as much as 1.2 percent to $1,326.08 an ounce, the highest intraday price since Nov. 9, the day after Donald Trump was elected. It traded at $1,320.01 at 10:49 a.m in London, according to Bloomberg generic pricing.
“Gold prices have rallied to their highest level since U.S. elections,” analysts at Goldman Sachs Group Inc. including Abhinandan Agarwal said in a note to clients. “Expect precious metal stocks to outperform today.”
Gold has surged 15 percent this year, rising every month apart from June, as investors weigh the possibility of conflict in Asia, with Kim Jong Un’s regime pushing on with missile tests and U.S. President Donald Trump vowing a stern response. The precious metal has also climbed as the Federal Reserve is expected to go slow on further interest rate increases, which has weakened the dollar.
Miners’ shares advanced. The FTSE/JSE Africa Gold Mining Index climbed 5.5 percent after touching the highest since May, with Harmony Gold Mining Co. Ltd. and AngloGold Ashanti Ltd. leading the pack.
Pyongyang had threatened earlier to fire a missile over Japan toward the U.S. territory of Guam, prompting Trump to warn he’d retaliate with “fire and fury.” Trump has also said force is an option to prevent Kim from gaining an intercontinental missile that could deliver a nuclear weapon to the U.S.
“A missile passing over Japan is an unprecedented, grave and serious threat to Japan’s safety,” Japan’s Chief Cabinet Secretary Yoshihide Suga told a news conference, adding there were no reports of damage. The Pentagon confirmed the missile flew over Japan, and said it didn’t pose a threat to North America.
Hedge fund billionaire Ray Dalio endorsed bullion this month, recommending that investors consider placing 5 percent to 10 percent of their assets in the commodity. Dalio, who manages Bridgewater Associates, cited risks including the situation in North Korea, with “two confrontational, nationalistic, and militaristic leaders playing chicken with each other.”
In other precious metals:
- Silver added as much as 1 percent to $17.6318 an ounce, the highest level since June 8, before trading at $17.4855
- Platinum jumped as much as 1.1 percent to $1,000.51 an ounce, the highest since March 6
- Palladium rose as much as 1.4 percent to $948.97 an ounce to the highest since February 2001
© Copyright 2023 Bloomberg News. All rights reserved.