Gold Finds Support on Korea Nuclear Test

February 12, 2013 at 09:33


Gold rallied from its lowest level in more than a month as North Korea conducted its third nuclear test, spurring demand for a haven. Platinum advanced.

North Korea detonated an atomic warhead underground, the official Korean Central News Agency said in a statement today. South Korea’s Defense Ministry estimated the yield at 6 to 7 kilotons, bigger than the previous two tests. The test comes after the United Nations last month tightened sanctions on the totalitarian state after it launched a rocket in December.

“Given the rhetoric coming from South Korea and what they’ve said about if North Korea decides to detonate, it doesn’t give them a lot of room to maneuver,” said David Lennox, an analyst at Fat Prophets in Sydney. South Korean Foreign Minister Kim Sung Hwan has vowed to “firmly” deal with a nuclear weapons test and other provocations.

Bullion earlier fell to the lowest in more than a month as a top U.S. treasury official said Group of 20 nations must refrain from competitive devaluations. Global growth was “weak and vulnerable to the downside,” said Lael Brainard, the undersecretary for international affairs. Gold gained for a 12th year in 2012 on demand for a haven against currency debasement.

Gold for April delivery dropped as much as 0.4 percent to $1,643 an ounce and traded at $1,645.40 on the Comex in New York. Most-active futures fell 0.2 percent to 30,595 rupees per 10 grams ($1,763.30 an ounce) on the Multi Commodity Exchange of India Ltd. Markets in Hong Kong, China, Singapore, Malaysia and Taiwan are closed for Lunar New Year holidays today.

Bullion declined 1.8 percent this year as silver advanced 1.6 percent and platinum climbed 10 percent. One ounce of gold bought as many as 53.39 ounces of silver today, the most since Jan. 29, data compiled.