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Gold Prices Start the Week on Upbeat Note Amid North Korea Worries

North Korea worries push gold prices higher

Investing.com - Gold prices started the week on an upbeat note on Monday, as investors fretted about the simmering tensions between the U.S. and North Korea.

North Korea's leader Kim Jong Un said his nuclear weapons were a "powerful deterrent" that guaranteed its sovereignty, state media reported on Sunday, hours after U.S. President Donald Trump said "only one thing will work" in dealing with the isolated country.

Trump did not make clear to what he was referring, but his comments seemed to be a further suggestion that military action was on his mind.

In recent weeks, the hermit state has launched two missiles over Japan and conducted its sixth nuclear test, and may be fast advancing toward its goal of developing a nuclear-tipped missile capable of hitting the U.S. mainland.

A Russian lawmaker who had just returned from a visit to Pyongyang was quoted as saying on Friday that North Korea is preparing to test-launch such a missile.

Comex gold futures tacked on $9.00, or around 0.7%, to $1,283.89 a troy ounce by 2:45AM ET (0645GMT). There will be no floor trading on the Comex on Monday because of the Columbus Day holiday in the U.S. All electronic transactions will be booked with Tuesday's trades for settlement.

The yellow metal lost around 0.8% last week, its fourth-straight weekly decline.

Gold prices have been on the back foot in recent weeks amid optimism over the health of the U.S. economy and growing expectations of a Federal Reserve rate hike in December.

Global financial markets will focus on minutes of the Federal Reserve’s latest policy meeting in the week ahead, as investors look for more hints on the timing of the next U.S. rate hike.

Investors will also keep an eye out on a few U.S. economic reports, with Friday's inflation data in the spotlight, to gauge how it will impact the Fed's view on monetary policy in the coming months.

Interest rate futures are pricing in around a 90% chance of a December Fed rate hike according to Investing.com's Fed Rate Monitor Tool, due to a recent raft of upbeat economic data and hawkish language from central bank officials.

Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the greenback.

A stronger dollar can weigh on commodities priced in the currency as it makes them more expensive in other currencies.

Elsewhere on the Comex, silver futures climbed 16.0 cents, or about 1%, to $16.95 a troy ounce.

Among other precious metals, platinum gained 0.6% to $921.80, while palladium rose 1% to $927.73 an ounce.

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