Gold prices rose for a third straight session on Tuesday to their highest since November as mounting geopolitical tensions over a new North Korean missile launch stoked demand for safe-haven assets and weighed heavily on the dollar and equities.
Spot gold was up 0.6 per cent at $1,317.47 per ounce, as of 0627 GMT, after earlier hitting $1,322.33, its highest since November 9.
Gold gained 1.4 per cent in the previous session in its biggest one-day percentage rise since mid-May. US gold futures for December delivery rose 0.6 per cent to $1,323.00 per ounce.
South Korea and Japan said the missile North Korea launched early on Tuesday landed in Pacific waters east of Hokkaido after flying over the northern Japanese island, in a sharp escalation of tensions on the Korean peninsula.
“North Korea's missiles over the Japanese Hokkaido islands obviously fuelled buying for the flight for safety kind of money including the Japanese yen and gold,” said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.
The news saw equities plunging and the yen touching four-month highs against the dollar. Geopolitical risks can boost the demand for safe-haven assets such as gold which is considered a good store of value during volatility in other markets.
Spot gold is expected to rise to $1,337 per ounce, as it has cleared a resistance at $1,312, said Reuters technical analyst Wang Tao.
“Since it broke the $1,300 resistance, I think the market really changed,” Ikemizu said.
“I don't think gold will be going back to $1,200 anymore... there's more bullish factors in this market.”
US political uncertainty
The metal was also drawing support from uncertainty surrounding President Donald Trump's administration in the US after his remarks raised fears of a government shutdown last week.
Trump had on Monday said he hoped a government shutdown would not be necessary over his demand that the US Congress fund his proposed wall along the southern border with Mexico.
Meanwhile, holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 1.1 per cent to 814.36 tonnes on Monday.
Among other precious metals, silver rose 0.4 per cent to $17.48 per ounce. Earlier in the session, it hit $17.56, its highest since early June.
Platinum gained 0.3 per cent to $989.60 per ounce, after marking its highest since early March at $994.10, early in the day. Palladium climbed 0.7 per cent higher to $939.50 an ounce, trading within sight of its 16-1/2-year high of $940.50 hit on Friday.