Gold prices increased Wednesday after North Korea announced it tested a hydrogen bomb while global weak economic signals backdrop and geopolitical tensions.
Gold futures rose 1.3% to $1,091.90 per troy ounce on the Comex division of the New York Mercantile Exchange. It is the highest level in a month and the third straight gaining session to start the year.
The gold development comes amid growing strife in the Middle East, between Saudi Arabia and Iran and fears of China’s economic slowdown. Those global concerns have crushed stock markets and helped boost demand for gold, which is considered a safe asset during distress times in the world.
Adam Koos, president of Libertas Wealth Management Group said, “China and industrial demand will be another issue investors should pay attention to this year. Gold buyers will be locked in on geopolitical events in the Middle East and, while I think it’ll be short term, North Korea is a contender for attention.”
The climb for gold also affected by the metal mostly shrugged off a better-than-expected reading of employment. According to a report from Automatic Data Processing, United States increased 257,000 private-sector jobs in December 2015.
The employment report comes ahead of the more closely watched nonfarm-payrolls report due Friday and would normally be observed as a headwind for precious metals, raising the possibility that the Federal Reserve will more quickly normalize interest-rate policy on signs of economic health.
Some analysts think that gold’s rally may be driven in part by trading based on technical analysis of the markets, which show it reach a point where it is poised for additional gains. “Stock markets remain weak, China keeps putting out bad economic figures and gold should really benefit,” said David Govett, head of precious metals at Marex Spectron.