LONDON: Gold recovered from a four-week low on Friday as investors sought a safe haven from geopolitical uncertainty caused by rising tensions between North Korea and the United States. Bullion is often used as a refuge in times of political or economic turbulence, while assets considered risky such as stocks are dumped.

North Korea said on Friday it might test a hydrogen bomb in the Pacific Ocean after President Trump vowed to destroy the country, with leader Kim Jong Un promising to make a “mentally deranged” Trump pay dearly for his threats. “Gold took quite a beating after the US Federal Reserve meeting but now the market got the news about North Korea and now investors are moving back in gold,” Danske Bank analyst Jens Pedersen said.

Earlier this week, the Fed signalled it was still on track to raise interest rates by the end of the year. This weighed on gold as tighter monetary policy raises the opportunity cost of holding non-yielding bullion.

Spot gold was up 0.3 per cent at $1,294.60 an ounce, as of 1330 GMT, having hit a four-week low of $1,287.61 in the previous session. Bullion was down 1.7pc for the week and heading for a second weekly decline.

US gold futures climbed 0.2pc to $1,297.50 an ounce. The dollar and stocks fell on Friday against the backdrop of these tensions, while the Japanese yen and Swiss franc gained on the possibility of North Korea conducting another nuclear test.

Silver was flat at $16.94 an ounce, while platinum was up 0.6pc to $929.50. Both metals were, however, set for a second weekly decline. Palladium rose 0.4pc to $915 an ounce and was set for a third straight weekly loss.

Published in Dawn, September 23rd, 2017