According to reports, North Korea announced a successful test of a hydrogen bomb last Sunday, which could be installed on an intercontinental ballistic missile and led to a sharp demand for gold. The morning gap-up from the closing level of 1324 to 1334 turned out to be very predictable with such growth of geopolitical tension.
At the European session on Monday, gold also continued to be in demand as the South Korean Defense Ministry reported that North Korea is preparing for a possible launch of an intercontinental ballistic missile with a hydrogen bomb.
In response, US Secretary of Defense James Mattis said that any threat to the United States or its territories, including the island of Guam, would receive a massive military response, effective and devastating. It also became known that the United States and South Korea are discussing the nomination of an aircraft carrier strike group.
All this news is fueling the demand for gold, which can reach the next highs, located in the area of 1339 and 1344.50, already in the near future. The restraining factor could also be the upgrade of the level of 1350.65.
The demand for risky assets in the meantime is very passive. Good data on the US consumer sentiment indicator, which rose in August, supported the US dollar, which fell sharply after a disappointing report from the US Department of Labor.
According to the data, the final index of consumer sentiment in August 2107 was 96.8 points versus 93.4 points in July. Economists predicted the index at the level of 97.3 points.
According to the Ministry of Labor, the unemployment rate rose to 4.4% from 4.3% in July, and the rate of hiring declined. The problem is also caused by a low increase in the level of wages in the US in August this year.
Today in the US is a day off due to Labor Day, which means low activity in the markets, especially in the North American session. It is best to follow the development of the situation on the North Korean peninsula.
As for the technical picture of the EUR/USD pair, then the return to the level of 1.1870, which the euro buyers managed to get today, may lead to the formation of another wave of sale of risky assets with the renewal of last week's lows around 1.1820 and further output at 1.1750, where the first buyers will show themselves.