North Korea tensions ignite buying of haven assets

Gold prices jumped in early Asian sessions on Thursday and hit $1,279.64, the highest in nearly two months, bolstered by the safe-haven demand triggered by rising tensions on the Korean peninsula. North Korea dismissed yesterday’s warnings by US President Donald Trump that it would face “fire and fury” if it threatened the United States as a “load of nonsense”, and outlined detailed plans for a missile strike near the Pacific territory of Guam.

On Wednesday, Sterling fell below $1.30, as investors looked to key data due next week for clues on the health of the British economy, as the country prepares to leave the European Union. The Pound had been supported in recent weeks by the view that the Bank of England (BoE) would soon hike interest rates. Despite BoE rate-setters last week trying to drive home the message that interest rates are likely to rise, the market focused on the fact that policymakers voted 6-2 in favor of keeping rates at their record lows. The Bank also revised down its growth and inflation forecasts, and warned of Brexit risks.

Meanwhile, yesterday, the New Zealand Dollar skidded and touched $0.7265 after governor Graeme Wheeler stated that the option of foreign exchange intervention was “always open” to the bank, and his assistant John McDermott said that the currency “does need to adjust down”. The Kiwi initially held firm following the RBNZ’s decision to hold interest rates steady at 1.75% early yesterday and said that it still expected inflation to rise gradually as capacity pressures increase, thwarting some expectations it would strike a more dovish tone given recent soft economic data.