The gold price is stable in early Asian trading today after falling heavily yesterday after a planned missile test from North Korea failed to eventuate, but that may change over the next couple of days on the back of stronger sanctions imposed by the UN security council.
It what has been classed as a watered-down version, the UN security council that includes China and Russia, unanimously approved a new round of sanctions against North Korea which did not include an oil embargo as the US had sought.
Many believe this will not deter North Korea from their nuclear ambitions and another test may be around the corner and as is the usual case investors will seek safety in gold.
Data out of the US this week which includes CPI numbers on Thursday may also help choose the direction of gold.
Currently inflation in the US sits well below the US Federal Reserve’s target rate at 1.8 percent where it has remained for some time and even a booming jobs market can’t boost the figure
Unless there is a strong rebound in inflation from the previous months the chances of any further rate hikes from the Fed this year will disappear which will also boost the gold price
“The major determinant of gold last week was geopolitical tensions," says research chief Mark To at Wing Fung Financial Group in Hong Kong, "
“And while at the weekend we did not see any crisis triggering event, those tensions are still with us and the slowing of interest rate hikes and other tightening measures are going to be with us as well." He added