Renewed Korean Anxiety Boosts Safe-Haven Demand

Uncertainty and geopolitical tensions surrounding how US President Trump might respond to North Korea has continued to dent market risk sentiment. Investors were spooked by weekend comments from President Trump when he suggested that years of negotiations with North Korea have proved futile.

Apart from North Korea, a weaker greenback is also lending support to bullion, but rising expectations that the Fed would lift interest rates again this year is weighing on momentum. Federal Funds futures are currently pricing in as much as an 88.00% likelihood of a US rate hike in December. Higher interest rates curb demand for the non-interest-bearing assets like dollar-denominated gold. XAUUSD was last seen around $1287.00, with $1290.00 an ounce represents the immediate resistance on the upside. A break above could see bullion prices rally all the way to $1300.00 an ounce.

Buoyed by foreign investment and dividends, Japan’s current account surplus expanded in August from a month earlier.  The country registered a surplus for the 38^th-straight month, although it was squeezed to a degree by higher energy imports which weighed on the figure. The current account stood at JPY 2.38 trillion ($21.10 billion) last month, topping the consensus forecast calling for JPY 2.22 trillion surplus following a July reading of JPY 2.32 trillion. The primary income surplus, which reflects how much Japan earns from overseas investments, came in at JPY 2.24 trillion.

Another driver of the figures upside was the goods trade surplus which climbed to JPY 318.70 billion compared to expectations of JPY 264.30 billion. Separately, Bank of Japan Governor Haruhiko Kuroda reaffirmed the Central Bank’s resolve to continue its massive stimulus programme until inflation reaches the target. EURJPY is off the highs of the session to currently hover around 132.600.