Gold hits 1-year peak as US dollar sags, North Korea concerns support

[BENGALURU] Gold hit its highest in over a year on Friday as the US dollar sagged after weaker-than-expected US jobs data and as festering tensions over North Korea stoked safe-haven demand.

Spot gold was up 0.4 per cent at US$1,352.91, as of 0723 GMT. Earlier in the session, it marked its strongest since August last year.

It was up over 2 per cent for the week, on track for a third weekly gain.

US gold futures for December delivery rose 0.7 per cent to US$1,359.50.

"Lingering North Korean tensions and a general US dollar, sell-off propelled gold to new 2017-highs overnight. Gold continues breathing thin air at these rarified levels with the next technical target at US$1,375.00," said Jeffrey Halley, a senior market analyst at Oanda.

The US dollar index was down 0.5 per cent at 91.177 against a basket of six major currencies on Friday, after earlier touching its lowest since January 2015.

The greenback was under pressure as long-dated Treasury yields fell to 10-month lows, with weak US jobs data and worries about the impact of hurricanes Irma and Harvey on the world's largest economy prompting demand for government debt.

"Looking at the hurricanes, the damage is expected to be huge and because of that safe-haven flows into gold, the Japanese yen and Treasuries have been seen of late," said OCBC analyst Barnabas Gan.

"The very strong yellow metal price is due to safe-haven flows. Some of the gold-strength is very much due to the ongoing North Korean tensions as well. The risk for intensified conflicts is there," Mr Gan said.

US President Donald Trump said on Thursday he would prefer not to use military action against North Korea to counter its nuclear and missile threat but that if he did it would be a"very sad day" for the Pyongyang leadership.

"Gold prices rallied as weaker-than-expected economic data provided some doubt as to the next rate hike by the Federal Reserve," ANZ analyst Daniel Hynes wrote in a note.

The US Federal Reserve should continue gradually raising US interest rates given low inflation should rebound, New York Fed President William Dudley said.

Higher interest rates tend to boost the dollar and push up bond yields, putting pressure on gold by increasing the opportunity cost of holding non-yielding bullion.

Spot gold may break resistance at US$1,350 per ounce and rise more to the next resistance level at US$1,358, said Reuters technical analyst Wang Tao.

Meanwhile, silver gained 0.4 per cent to US$18.15 an ounce. Early in the day, it touched US$18.20, its best since mid-April.

Palladium added 0.6 per cent to US$961.00 an ounce, but was set to record its first weekly decline in seven weeks.

Platinum climbed 0.3 per cent to US$1,018.00 an ounce, after earlier hitting its best since March.

REUTERS