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Gold hits two-month peak on North Korea war of words

  • North Korea tensions stoke safe-haven demand for gold.
  • Spot gold price at cusp of breaking above downtrend.
  • Silver touches highest since mid-June.
PROSPECTING GOLD
AP

The price of gold climbed to the highest levels in two months on Thursday as the United States and North Korea exchanged more threats, prompting investors to buy bullion as a safe haven asset.

"For now, the uptrend is very much intact in gold, reacting to external geopolitical events," said Jonathan Butler, commodities analyst at Mitsubishi in London.

Spot gold was up 0.59 percent at $1,284.70 per ounce since June 9. Gold climbed 1.3 percent in the previous session, its biggest gain since mid-May.

U.S. gold futures for December delivery settled at $1,290.10 per ounce. The $1,279 area is a key technical level, representing a downtrend that has been in force since mid-2016 when gold surged to a two-year peak of $1,374.91.

Gold extended gains after data showed U.S. producer prices unexpectedly fell in July, recording their biggest drop in nearly a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.

The market was waiting for U.S. consumer inflation data on Friday that would offer more clues about future Fed decisions. The $1,279 area is a key technical level, representing a downtrend that has been in force since mid-2016 when gold surged to a two-year peak of $1,374.91.

"If we break above this downtrend, then we potentially open up the region up to $1,300, the recent highs we saw in April and June," Butler said. Speculative positions in U.S. gold futures remain subdued, said UBS strategist Joni Teves.

"Subdued participation this year and lean positioning suggests that market participants would have to play catch-up on a break higher," she said in a note.

Physical gold demand, however, was sluggish in India while the rally in global prices dampened buying elsewhere in Asia and holdings of the largest gold-backed exchange-traded-fund (ETF) , was unchanged on Wednesday.

"At least in this segment, investors apparently remain reluctant to seek gold's safe haven. The gold market shows various signs of ambivalence and we believe that this pattern will continue into the foreseeable future," Norbert Rücker, head of macro & commodity research at Julius Baer, said in a note.

In other precious metals, silver rose 1.09 percent to $17.09 per ounce, its highest since June 14.

Platinum gained 0.9 percent to $980.25 per ounce. In the previous session, it marked its highest since April 21 at $980.60. Palladium climbed 0.76 percent to $897.75 per ounce.