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What does the North Korean crisis mean for gold prices?

The price of gold was a key beneficiary of the recent increase in tensions between the US and North Korea. While we think that the chances of a full-scale war are quite slim, there remains huge uncertainty as to how the current geopolitical crisis will play out and this may support gold prices over the coming weeks. However, on past form, gains might not be sustained.
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More from Metals

Precious Metals Update

Gold’s lustre to return in 2023

Having fallen sharply in Q2, we think that the gold price is now close to a cyclical trough. What’s more, the price should revive a little in 2023 as markets factor in the prospect of US monetary tightening.

3 August 2022

Metals Data Response

Global Steel Production (June)

Global steel production growth slowed in June as higher power costs in advanced economies contributed to lower output there. By contrast, the decline in China’s output slowed slightly. Overall, we expect global steel production to grow at a snail’s pace of less than 1% this year.

22 July 2022

Metals Data Response

Global Aluminium Production (Jun.)

Global aluminium production ticked up again in June, but the increase was not sufficient to explain the plunge in prices last month. Base effects will mean that China’s production growth will accelerate in the second half of this year, but supply will remain relatively constrained at a global level, which should eventually help to put a floor under prices.

20 July 2022

More from Capital Economics Economist

US Economics Weekly

Stronger growth not generating major imbalances

After the Fed’s decision to raise interest rates by another 25bp, Fed Chair Jerome Powell claimed in the post-meeting press conference that “the economy is doing very well” – we couldn’t agree more. That view was bolstered by May’s retail sales figures, which suggested that both consumption and GDP growth will rebound strongly in the second quarter, to above 4% annualised. The Fed’s financial account data, released last Friday, illustrate that the economic expansion is not being accompanied by a sharp rise in private sector debt. Rising household wealth is prompting households to save less of their incomes and firms have plenty of resources to fund investment, not least thanks to the 2017 tax reform. The main vulnerability is a renewed surge in Federal debt, but even that wasn’t as bad as it looked, because it was boosted by the suspension of the debt ceiling and partly matched by a rise in assets held in the Treasury account at the Fed.

15 June 2018

Commodities Weekly Wrap

Fears of protectionism weigh on prices

The Fed’s decision to hike its target rate by 25bp and the announcement that the US was going to press ahead with a 25% tariff on imports of Chinese goods prompted a rally in the dollar, which in turn weighed on commodity prices. China has already said it will retaliate, notably with a 25% tariff on soybeans, which was a key factor in the 4% slump in their price this week. Softer Chinese activity data for May, released on Thursday, also worried investors, particularly in the industrial metals markets.

15 June 2018

Canada Economics Weekly

Household debt will remain a risk for years to come

The news earlier this week that household debt had edged down to 168.0% of disposable incomes in the first quarter, from 169.7% in the final quarter of last year, was greeted by some as confirmation that the Bank of Canada had somehow engineered a soft landing in the housing market. It hasn’t. Debt usually surges in the fourth quarter ahead of the Holiday season and falls back in the first quarter, as people pay down their credit cards. Moreover, by focusing on debt exclusively, those commentators also conveniently failed to note that overall household net worth declined to a two-year low of 857% of disposable income.

15 June 2018
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