Categories: General Market Commentary / Precious Metals
Topics: General Market Commentary / General Precious Metals

North Korea breathes new life into gold price, mining stocks

On Wednesday, the return of the safe haven buyer and a weaker US dollar combined to lift the gold price to its highest level in eight weeks.

Gold futures in New York for delivery in December, the most active contract, touched a high of $1,284.70, up 1.8% from Tuesday's settlement price in heavy volume of just under 28m ounces traded, before pairing some gains in afternoon trade. Gold is up 11.5% so far in 2017.

Gold's rally came after US President Trump said in response to intelligence reports that North Korea has developed miniaturized warheads, that further threats from the country would be met with “fire and fury like the world has never seen.” The totalitarian state then released a statement saying it's examining an operational plan to fire ballistic missiles toward a US military base on the island of Guam west of the Philippines.

Ross Norman, CEO of London-based bullion trader Sharps Pixley told MarketWatch gold is "behaving in its traditional manner as a safe-haven asset" but only a rally above $1,295 would convince him the metal has entered a significant bullish phase:

“I’m always suspicious of moves like this because the issues that cause them are rarely sustained,” he said, referring to the political tensions between North Korea and the U.S.

Gold's leg up on Wednesday saw major gold mining stocks enjoying one of the best trading days in weeks with gains across the board.

Top producer Barrick Gold added 1.4% affording the Toronto-based company a $19.4 billion market valuation in New York.  Gains for world number two producer Newmont with output of  5m ounces expected this year, lifted the Denver-based company's year to date performance to 5.8%.  Vancouver-based Goldcorp added 1.2% for a market cap of $12.7 billion, but the stock is still down 6.7% so far in 2017.

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