Gold prices climbed Monday after North Korea's foreign minister called President Donald Trump's latest comments a declaration of war.
Gold for December delivery turned positive following the comments and closed up 1.1% at $1,311.50 a troy ounce on the Comex division of the New York Mercantile Exchange. Gold had its worst week since early July last week and has fallen in consecutive weeks after hitting its highest level in more than a year earlier this month, in part because of easing tensions between the U.S. and North Korea.
However, rhetoric between the two countries escalated again Monday when North Korea's Foreign Minister Ri Yong Ho responded to Mr. Trump's weekend comments by saying the threat was "clearly" a declaration of war.
Mr. Trump had earlier responded to a Saturday warning from Mr. Ri that a missile attack on the U.S. mainland had become "inevitable" by tweeting over the weekend that "If he echoes thoughts of Little Rocket Man [ Kim Jong Un], they won't be around much longer!"
Monday's comments stoked demand for gold and other haven assets because many investors favor them during times of geopolitical uncertainty.
"You're going to continue to see limited selling interest in the gold market because of this North Korean situation," said Jim Wyckoff, senior analyst at Kitco Metals.
Gold prices had edged lower before Mr. Ri's Monday comments after investors shook off the weekend warnings between the two countries. Prices were little changed following Chancellor Angela Merkel's conservative alliance winning the German election despite a steep drop in support and an anti-immigrant party surge, signaling possible turbulence ahead for Europe's largest economy.
Still, many analysts have said they expect geopolitical tensions to keep a floor on gold prices moving forward. Tensions have also been rising recently between the U.S. and Iran.
Many investors will be monitoring a series of speeches by Federal Reserve officials this week for clues about the future of the central bank's monetary policy. Gold prices fell last week after the Fed kept the option of a December interest-rate increase on the table while maintaining its projected path for rate rises through the end of next year. Gold struggles to compete with yield-bearing assets like Treasurys when borrowing costs rise.
The dollar rose following the Fed's latest policy discussion, making gold more expensive for foreign buyers. The WSJ Dollar Index, which tracks the U.S. currency against 16 others, was recently up 0.3% following its best two-week stretch of the year.
"That statement that they put out last week was one of the most hawkish ones I've heard in a while" said Bob Haberkorn, senior market strategist at RJO Futures.
Among base metals, copper for December delivery edged down 0.2% to $2.9375 a pound. The industrial metal has fallen in three straight weeks after hitting its highest level in almost three years earlier this month, with shaky data from China, a stronger dollar and a decline in speculative fervor contributing to losses.
(END) Dow Jones Newswires
September 25, 2017 14:39 ET (18:39 GMT)