Gold remains well bid as U.S. investors return from the long holiday weekend. The yellow metal posted solid gains yesterday on escalating tensions with North Korea.
North Korea conducted a nuclear test on Sunday. Speculation is that it was a hydrogen bond in the range of hundreds of kilotons, far larger than all previous tests. Obviously the U.S. and its allies have taken notice and the saber rattling has ramped up considerably.
North Korea is reportedly moving a missile, which has further raised concerns. The South Korean defense minister has said it’s worth considering redeploying U.S. tactical nuclear weapons to counter recent aggressive moves by the DPRK.
Congress returns to work today after the month-long summer recess. They will begin trying to hammer out a budget and a resolution to the the debt ceiling as the country hurdles toward a possible government shutdown and/or default. A number of other contentious pieces of legislation are being forwarded in the weeks ahead, which may further muddy the waters.
The heightened geopolitical and political tensions will continue to keep gold underpinned. Last year’s high at 1375.15 is the next significant level of resistance.