Gold rallies to fresh 6-week highs around $1270 amid risk aversion
The ounce troy of the precious metal gathered strength against the greenback in the last hours, pushing the XAU/USD pair to its highest level since June 14 at $1270.30. At the moment, the pair is trading at $1269, up nearly $10, or 0.8% on the day.
The precious metal found some extra demand in the session as investors started to seek refuge after the Japanese government said that North Korea has fired what appears to be a missile and South Korea's military has confirmed that it was fired at 23:11 local time. According to Kyodo news agency, the missile could be another ICBM (Inter-Continental Ballistic Missile) as it flew for 45 minutes before landing in Japan's exclusive economic zone.
- North Korea reportedly fires a missile - Kyodo
- Japan: North Korean missile could be another ICBM
Markets are waiting on fresh developments over the incident while Japanese Prime Minister Abe is having an emergency meeting with government officials.
On the other hand, the greenback weakness is also giving an additional boost to the pair. Following today's data from the U.S., which showed a weak personal consumption expenditure prices growth despite solid Q2 GDP increase, the US Dollar Index is at 93.20, losing 0.6% on the day.
- US: Real GDP increased at an annual rate of 2.6% in second quarter of 2017
- US: PCE price index increased 0.3 percent in second quarter
Technical outlook
With this latest upsurge, the CCI on the daily graph surpassed the 100 thresholds, suggesting the bullish momentum is building up. $1274 (May 31 high) aligns as the initial hurdle for the pair ahead of $1280 (Jun. 14 high) and $1288 (Jun. 8 high). On the downside, supports could be seen at $1257 (daily low), $1248 (50-DMA) and $1236 (20-DMA).