Gold Steadies as Markets wait on the U.S for a Response to North Korea’s Taunts

Gold prices began to reverse declines from the earlier part of the week, as the Markets responded to a 2^nd missile test over Japan in as many weeks and just after the latest sanctions were approved by the UN. At the time of the report, gold prices recovered to $1,330 levels, having eased back through the first half of the week

We’ve seen gold move recover from Wednesday’s low of the week, though any material gains are likely to be tempered as the markets respond to August inflation figures out of the U.S, which came in ahead of expectations and suggested that even the requirements of the more dovish members of the FOMC may have been met ahead of next week’s monetary policy decision and release of the FOMC’s economic projections.

The Dollar has remained resilient in spite of the latest missile test, managing to hold on to Thursday’s gains, which will hold back any moves in gold, with the markets needing to reconsider the likelihood of a rate hike before the end of the year.

We’ve seen the markets become desensitized to the North Korean threat, with this morning’s market response significantly less severe than the knee jerk reaction of 2-weeks ago, the reality being that the U.S is unlikely to make any first moves without the agreement of the UN.

Gold back in favor over North Korea

Following yesterday’s inflation figures, the markets will be looking ahead to a flurry of data out of the U.S this afternoon, with August retail sales being the key driver for the day. Today’s gains could well go into reverse should the numbers impress, as the markets look ahead to next week’s FOMC monetary policy decision.

Geo-political risk has been gold’s backbone throughout the year and will likely continue to provide support, but should sentiment towards FED monetary policy improve and the U.S administration finally begin to make headway in delivering tax reforms by the end of the year, Kim Jong-Un will be all that’s left for the gold bulls to hold on to.

Other stats out of the U.S include industrial production, business inventories, New York State Manufacturing PMI figures and prelim consumer sentiment numbers for September. Barring any shocking numbers, it’s going to be down to the retail sales data, with Dollar strength and any continued rise in yields likely to hold back a gold rally, with one caveat… Any hint of military action against North Korea through the day and the U.S stats are going to make little difference to a run for the havens.

Gold Hourly

Oil prices pulled back from $50 with some profit taking weighing on the day, with gains in the Dollar pegging back appetite for crude going into the weekend. Despite today’s declines, it’s been a solid week for crude, with forecasts on both the demand and supply side bullish, the only question now being whether Russia and OPEC can deliver the markets with something special later in the year that can pull crude out of its current ranges, as concerns of a possible softening in the Chinese economy will likely linger over the near-term.

Silver prices gained momentum through the Asian session, keeping pace with gold in response to the latest missile test by the North Koreans, with Dollar strength stemming from the uptick in inflation having limited effect ahead of today’s retail sales figures out of the U.S.