Gold prices surged to an 11-month high early today as investors sought safe havens following North Korea´s latest nuclear test.
The yellow metal was up by around 1% today, trading at $1,338 per ounce, in the wake of Pyongyang´s claims to have successfully tested a hydrogen bomb at the weekend.
Gold has risen by around 6% since early August, supported by subdued US inflation as well as the rising geopolitical worries.
US consumer prices for July were up just 0.1% on the month, behind expectations for a 0.2% rise. Meanwhile, Friday´s weak US jobs and wage report provided another boost for gold going into the weekend.
Gold looks well placed to make further gains this week, with North Korea´s latest underground nuclear explosion thought to be ten times more powerful that previous tests.
On Monday, the US administration warned that any threat from North Korea to the US or its allies could be met with a “massive military response”.
Last week´s move by Pyongyang to fire missiles over northern Japan had already generated international outcry.
Safe haven boost
While the dollar weakened early today, with US dollar index futures moving down by around 0.4%, other safe havens such as the yen were on the rise.
US 10-year Treasury bonds were also trading higher this morning as investors ran for cover.