Gold Nears 1-Month High Amid Resurgent Risk Factors

Risk aversion remains a dominant force in financial markets after North Korea fired a short range ballistic missile overnight, defying global pressure and threats of stricter sanctions. Japan immediately lodged a protest, claiming the missile landed in the country’s exclusive economic zone. This latest provocation comes on the heels of the US sending a third aircraft carrier group towards the Korean Peninsula.

Despite the growing risks of a geopolitical showdown, the precious metal is flat on the session as the US dollar trends slightly higher on the session. Gold has now gained over 4.00% since hitting an eight-week trough of $1,213.80 on May 9^th, with hedge funds managers increasing net long positions in COMEX gold during the week ended May 23^rd, according to CFTC data. Gold was last trading close to $1267.25 per troy ounce with the short-term trend remaining upward while support at $1264.00 stays intact.

The United Kingdom’s FTSE 100 equity benchmark rallied to a new record on Friday as the British Pound tumbled to a one-month low following an opinion poll that showed the lead of the ruling Conservative Party narrowing ahead of the country’s general election scheduled for June 8^th. The latest poll by YouGov for The Times newspaper, conducted after Monday's Manchester bombing, showed Prime Minister Theresa May’s Conservative Party leading by a mere 5 percentage points over the Labour Party.

The weaker Sterling lifted the FTSE 100, as a majority of the index’s multinational companies depend on overseas sales in foreign-denominated currencies. The FTSE 100 rose 0.40% to close Friday at 7,547.63. FTSE 100 futures have also mirrored the bullish momentum in the index, closing out last week on a high note near 7530.