Investors pile on safe-haven gold after North Korea's missile launch

 
Courtney Goldsmith
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North Korea announced yesterday it had successfully test-launched a missile (Source: Getty)

Gold prices rose in overnight trading as investors flocked to the safe-haven asset after North Korea's successful test-launch of an intercontinental ballistic missile.

The yellow metal rose as high as $1,228.40 per ounce after US secretary of state Rex Tillerson last night said the act represented "a new escalation of the threat" to the US and its allies.

Some experts said the missile had the range to reach the US state of Alaska as well as parts of mainland America.

However, the price has fallen back as the US dollar index, which measures the greenback against a basket of currencies, recovered from yesterday's lows.

Gold was trading 0.29 per cent higher at $1,222.70 per ounce at the time of publishing.

"Gold is back from its $1,229 overnight best," said Mike van Dulken, head of research at Accendo Markets. "However, it has still managed to extend its rebound from seven-week lows after a joint military exercise between the US and South Korea, and has potential to revisit $1,230."

"Gold rallied along with the yen, however, the rally in safe havens has essentially been mild," said Kathleen Brooks, research director at City Index.

"While North Korea’s military ambitions are a background threat for markets, we don’t think this particular geopolitical event is at the stage yet where it will cause a spike in volatility."

Investors are also awaiting minutes from a meeting of the US Federal Reserve's Federal Open Market Committee (FOMC), due to be published later today, which will provide a clearer short-term direction, said Ipek Ozkardeskaya, senior market analyst at London Capital Group.

"In the absence of a hawkish FOMC read, gold could secure a stronger recovery toward the $1,248."

Read more: Gold sentiment fell in June as investors cut holdings for the third month

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