Gold price slightly up on Korean crisis

Gold edged up on Wednesday but showed a muted reaction to the heightened tensions between the two Koreas, with investors still focused on the debt crisis in Europe, which has put pressure on the euro.

A U.S. aircraft carrier headed toward the Korean peninsula on Wednesday, a day after North Korea launched dozens of artillery shells on a South Korean island in one of the heaviest attacks on its neighbor since war ended in 1953.

Gold added $1.31 an ounce to $1,377.51 an ounce by 0651 GMT (1:51 a.m. ET), having risen to $1,382 on Tuesday, its highest since November 12, but was still well below a lifetime high around $1,424.1 struck in early November.

U.S. gold futures were barely moved at $1,377 an ounce.

“I am not sure if the market is completely convinced that the tension would lead to something more,” said Darren Heathcote, head of trading at Investec Australia in Sydney.

“I think it’s being pushed and pulled by the euro as well at the moment.”

The euro edged up from a two-month low on Wednesday, finding support after a massive sell-off sparked by the euro zone debt crisis and heightened tensions in the Korean Peninsula.

In Ireland, the deeply unpopular government said it will explain on Wednesday how it plans to save 15 billion euros over the next four years, inflicting more pain on voters to prove that it can tackle the country’s debt.

Bullion dealers in Singapore noted selling of gold bars and scraps from consumers in Indonesia and Thailand, but China saw buying on dips related to the tension in Korea.

“It’s mainly safe-haven buying in gold after North Korea and South Korea exchanged fire yesterday, in addition to the buy-on-dip type,” said Li Ning, an analyst at Shanghai CIFCO Futures.

“Gold is likely to revisit its record high at the end of this year or next year, thanks to strong demand, particularly from this region.”

Silver was steady, platinum and palladium firmed ahead of the release of economic data in the United States.

The U.S. is scheduled to release a batch of data later in the day, including the weekly initial jobless claims, October durable goods order and new home sales, just ahead of the Thanksgiving holiday on Thursday.

The U.S. economy grew faster than previously estimated in the third quarter, but a slump in sales of previously owned homes in October indicated the recovery remains too anemic to reduce high unemployment.

Holdings in the iShares Silver Trust, the world’s largest physically-backed exchange-traded fund, rose to record highs for three consecutive sessions, signaling strong investment demand in the metal, seen as an alternate investment from gold.

Holdings in the SPDR Gold Trust remained unchanged at 1,285.084 tonnes.
Source: Reuters

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