Precious metals including gold have been buoyed by the tensions in the Korean peninsula. North Korea’s first missile launch over Japan pushed gold prices to a near one-year high, prompting investors to move to safe-haven assets such as gold, silver, Treasuries, and major currencies. But the move was short-lived after expectations of further escalation faded.
While the geopolitical tensions have subsided, they aren’t over yet. Historically, such geopolitical concerns have impacted the prices of precious metal significantly. As in the 2008 crisis, gold and silver have rallied after the breakdown of world economies.
Geopolitical tensions and gold
To be sure, when uncertainty heightens, investors rush toward alternative investments with safe-haven appeals and low counterparty risks. In this way, global uncertainty and instability are very conducive to higher gold prices.
Source: Market Realist