This Week's Need To Know It may have been naive to assume that Kim Jong-un, North Korea's Chairman and supreme leader would cease his saber rattling and put a stop to ongoing missile tests after US President Donald Trump’s recent 'Fire and Fury' remarks. Yesterday the country fired a ballistic missile over Japan, despite, or perhaps in response to Secretary of State Rex Tillerson’s praising North Korea’s “restraint” last week.

While doves might blame Trump’s aggressive response for fueling North Korea's war mongering, hawks could blame Tillerson’s appeasement. Whatever the triggers may actually have been, traders fired up their equity sell orders and prices fell this morning in Asian trading. At the same time, the usual safe havens—including gold, the Japanese yen and the Swiss franc—shot up. Gold climbed to its highest point this year, above the $1,300 key level; the unstoppable euro extended its gains, doubling yesterday’s more than 1 percent advance, shooting past the critical 1.2000 level for the first time since December 2013.

Although there was a recent sudden drop in gold prices after a mysterious trade of more than 2 million ounces of gold on Friday, gold has since recovered and stayed strong following last week’s trends. This unexpected trade occurred 20 minutes before Federal Reserve Chair Janet Yellen addressed policy makers in Jackson Hole, Wyoming. At the meeting, Yellen made no reference to US monetary policy, choosing to keep a tight focus on financial regulations instead. Combined with later comments made by European Central Bank Chief Mario Draghi, which refrained from mentioning the euro’s strength and mentioned the ultra-loose monetary policy and the euro zone’s economic recovery instead, traders were given a reason to lift gold prices on monetary policy uncertainty according to OCBC analyst Barnabas Gan. Naeem Aslam, chief market analyst with ThinkMarkets, believes that, since traders were made aware of the Federal Reserve’s position and the European Central Bank’s position, traders will now focus on the momentum instead. This will primarily involve examining movement which is driven by the dollar weakness. The dollar was recently weakened by the storm Harvey, dropping to severe lows and propping up gold. Read More

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