The Pure Gold Company
The Pure Gold Company comments on the results of North Korea’s nuclear test in the gold markets.
Today, the gold price has reached a one-year high in the wake of North Korea’s nuclear test.
The gold price now stands at £1030 per ounce. On the day of the EU referendum vote it stood at £844.95 and on June 24 when the Brexit results were announced it hit £960.85.
On Sunday, seismologists detected that North Korea had run a nuclear test. On state TV, the country claimed a ‘success’ for having tested a hydrogen bomb.
In response, US defence secretary James Mattis said the US has the ability to react to any threat against it or its allies, including South Korea and Japan, ‘with a massive military response’.
Despite previous sanctions and deals, North Korea has continued to run nuclear tests over the years. Mattis’ response echoes president Donald Trump’s warning last month that there will be ‘fire and fury’ if Pyongyang continued to threaten the US territory of Guam, located in the west Pacific.
German chancellor Angela Merkel and French President Emmanuel Macron were among world leaders voicing protests at the latest test, saying that North Korea’s provocations had ‘reached a new dimension’.
‘It is absolutely unacceptable if North Korea did force another nuclear test, and we must protest strongly,’ said Japanese prime minister Shinzo Abe.
The United Nations Security Council is holding an emergency meeting this morning.
More people bought physical gold this morning than on the day after the Brexit vote, when the gold price in sterling terms increased by 26 per cent within 24 hours, according to The Pure Gold Company.
‘Just this morning alone, we’ve been taking orders since 5am and first-time buyers of physical gold have increased by 114 per cent,’ says Josh Saul, CEO of The Pure Gold Company.
Investors rushed into gold exchange-traded products (ETPs) as North Korea is threatening further military tests near the US seas. Last week saw US$122.5mn inflows into gold ETPs as tensions with North Korea intensify.
He adds that the gold price has increased by 1 per cent this morning and by over 8 per cent since the beginning of August, with many analysts predicting further increases on the back of such severe uncertainty and volatility in financial markets.
‘Increasingly, our professional clients mention that president Trump’s pledge to stop doing business with any country that still has relations with North Korea could have severe financial implication, as it would mean possibly no trade with China, India, Mexico and France,’ says Saul.
‘Sabre-rattling from North Korea has boosted gold to the highest level in 12 months, regaining all losses since Donald Trump became president,’ says Martin Arnold, director and macro strategist at ETF Securities.
‘Continued uncertainty over North Korea’s intentions regarding missile testing and the concerning response from the US is likely to keep gold supported in the near-term.
‘The improving global economic backdrop will take a back-seat for gold prices until geopolitical tension eases, something that will likely be prolonged with a less than statesmanlike attitude from the Trump administration to foreign affairs.’