Rising tension surrounding the US, Russia and North Korea drove investors to turn to gold for their safe haven. Gold rose to a 5-month high on Wednesday, stretching its nearly 2 percent increases from the prior session as it benefits from safe haven flows.
The bullion is reaching its highest level since the week in November when President Donald Trump won the US election.
Gold futures rose 0.1 percent to $1,276.75 an ounce on Wednesday. Other precious metals such as silver went up 0.4 percent to $18.33 while copper futures fell 1.2 percent to $2.577. Platinum fell back by 0.1 percent to $967.70 while palladium went down 1.4 percent to $791.52.
The US strike on Syria last Friday and Trump’s promise to solve the North Korean issue with or without China have raised anxiety about political stability, and there are also indications that Russia and US are in conflict over Afghanistan.
In the case of Afghanistan, US Defense Secretary James Mattis has expressed his concerns at Russia’s actions in the country along with claims that it has been building connections with the Taliban which has conducted a campaign against Afghan and NATO forces. The Kremlin denied the allegation of supporting the group.
North Korea alerted the media on Tuesday of a nuclear attack in case they saw any sign of attack from the US as the US Navy strike group or armada as President Trump described it steamed on the way to the western Pacific. Japan’s navy is also planning to join forces with the US navy.
Based on the current situation, it is said that the $1,307 target level for gold will be exceeded if the circumstances get worse. Serious escalation could put the bullion to the $1,380 to $1,400 area tout suite but it has to be really critical.
Secretary of State Rex Tillerson visited Italy on Tuesday with a message coming from joint world powers disapproving Russian support for Syria. The US-Russia relationship will be strictly watched as Sec. Tillerson visits Moscow on Wednesday.
Meanwhile, yen also received a boost being that is also a favored refuge in times of trouble since Japan is recognized as the world’s largest creditor nation and since it gets its gain from safe haven demand.
The dollar rose 0.1 percent to 109.72 yen while the euro climbed 0.1 percent to 116.42 yen on Wednesday.
Whereas the Dow Jones Industrial (DJI) average dropped 0.09 percent to $20,631 while S&P 500 futures lose 0.2 percent to $2,346 and the Nasdaq futures sank 0.1 percent to $5,394. US dollar index fell 0.04 percent to $100.59 as of Wednesday 13:43 GMT.
Analysts expect companies’ profits for all S&P 500 to have grown 10 percent in the first quarter from a year ago.
Oil also received a boost on Wednesday after its draw back from five-week highs hit earlier in the day. Brent oil futures edged up 0.3 percent to $56.38 per barrel breaking its winning streak of six-session while crude got its five-week high of 0.3 percent to $53.59 a barrel.
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