Gold Prices are surging as tension grows over North Korea nuclear crisis

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Gold prices are found higher as the ice continues to melt between U.S. and North Korea. The two nations continue to exchange rhetoric and robust comments against each other while North Korea flexes its nuclear muscles.

Gold prices broke new record highs as North Korea confirms to have tested a new, more powerful, nuclear weapon.

One of the contributing factors that pushed gold above the $1,300 resistance is because of the tension between North Korea and the U.S. continuing to spark. A massive geopolitical tension, between the Korean Peninsula and the U.S would increase Gold’s appeal to investors.

Spot Gold has rallied and was climbing from $1,212 level an ounce, in July and is now reaching prices as high as $1,342.90 this week, Gold traditionally acts as a safe haven when investors get cold feet. Some of the precious metal’s gains have coincided with increased tension on the Korean Peninsula, plus when North Korea claimed that they had a successful hydrogen bomb test on just this Sunday.

Goldman Sachs however, disassociated the geopolitical tension to be a cause of the Gold’s price increase and explained that is was only around a $15 rally.

“We find that the events in Washington over the past two months play a far larger role in the recent gold rally followed by a weaker dollar,” it said, adding that’s the reason the yellow metal likely wouldn’t hold its gains.

It added that gold can offer a good hedge against global risks when the event leads to a debasement of the dollar, but on average, it doesn’t respond too much to geopolitics after controlling for macro variables.


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