Gold surges 1%, as North Korea rattles markets with nuclear check

Gold gained more than $ 12 an ounce on Wednesday to close above $ 1,090

Investing.com — Gold surged by more than 1% on Wednesday moving to near two-month highs, as investors piled into the safe-haven asset after North Korea roiled global markets with claims that it successfully tested a .

On the Comex division of the New York Mercantile Exchange, gold for February delivery wavered between $ 1,074.40 and $ 1,092.60 an ounce before settling at $ 1,090.70, up 12.10 or 1.12% on the session. Since closing near $ 1,060 on the penultimate trading day of 2015, gold has closed higher in four consecutive sessions. The precious metal has also risen in value by approximately 3.5% since falling to fresh six-year lows around $ 1,045 an ounce in early December.

Gold likely gained support at $ 1,046.20, the low from December 3 and was met with resistance at $ 1,132.60, the high from Nov. 3.

On Wednesday morning, North Korea said it successfully exploded a nuclear device at the Punggye-ri test site at 10:00 a.m. local time, tests which were overseen by the country’s leader Kim Jong-un, according to KCNA, North Korea’s official state news agency. The explosion marked the isolationist nation’s fourth nuclear test since 2006 and its first in nearly three years.

“Let the world look up to the strong, self-reliant nuclear-armed state,” Kim wrote in an apparent handwritten note displayed on North Korean state TV.

The tests were immediately condemned by China, North Korea’s strongest ally in the region, and United Nations Secretary-General Ban Ki-Moon. The three previous tests, conducted in 2006, 2009 and 2014 at the North Hamgyong Province site about 400 miles north of Pyongygang, drew intense criticism from the UN and resulted in a wide range of trade and economic sanctions.

“This act is profoundly destabilizing for regional security and seriously undermines international efforts,” Moon said in a speech on Wednesday morning.

Kim’s claims that his nation detonated a hydrogen bomb on Wednesday morning were met with by South Korea’s national spy agency and major international leaders abroad. The test triggered a 5.1 magnitude earthquake, the United States Geological Survey reported, nearly matching the Richter scale readings of the previous three tests. The size of the tremor is generally regarded as too small for a hydrogen test.

A hydrogen bomb, which is approximately 1,000 times more powerful than a conventional atomic weapon, combines hydrogen isotopes under high temperatures to form helium. Hydrogen bombs are more compact than conventional atomic weapons and are considered small enough to fit on most ballistic missile warheads. The U.S. military deployed RC-135 sniffer planes in the area to gather air samples shortly after the tests occurred in an effort to confirm whether the North Koreans conducted a hydrogen bomb test, Pentagon sources told NBC News.

Gold is viewed as a safe-haven asset for investors in periods of increased geopolitical instability.

Investors await the release of the Federal Reserve’s minutes from its December meeting on Wednesday afternoon for further indications on the pace of tightening the U.S. central bank could employ over the next year. Earlier on Wednesday, Fed vice chairman Stanley Fischer told CNBC, that estimates of four interest rate hikes in 2016 were in the right “ballpark.”

In long-range forecasts issued last month, the Federal Open Market Committee estimated that the upper range of its benchmark Federal Funds Rate will increase by 1.0% by the end of 2016 to 1.5%. The FOMC approved a rate hike of 25 basis points on December 16 when it lifted short-term interest rates for the .

Any rate hikes are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments.

The , which measures the strength of the greenback versus a basket of six other major currencies, was relatively flat in U.S. afternoon trading at 99.48, up 0.02% on the day. The index is on pace for its seventh straight winning session.

Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for March delivery lost 0.016 or 0.11% to 13.965 an ounce.

for March delivery fell 0.007 or 0.35% to close at 2.089 a pound,

Gold surges 1%, as North Korea rattles markets with nuclear check