Gold just short – term sharp rise! Close to $1,705! North Korea has announced! Completely cut off and abolish all inter-Korean communication lines!

The DOLLAR index was little changed near 96.70 in Asian trading on Tuesday. Spot gold rallied quickly in the short term, breaking through the $1,700 / oz barrier and briefly approaching $1,705 / oz. Analysts pointed to the weakness of the DOLLAR and expectations that the Us Federal Reserve would maintain its dovish monetary policy stance as a positive for gold, as well as the latest news from North Korea, which announced it would completely cut all inter-Korean communication lines. The news sparked increased risk aversion in the market, pushing gold prices higher.

Gold rallied on Monday after a sharp sell-off the previous session on expectations the Federal Reserve would adopt dovish monetary policy. Spot gold rose as high as $1,700.40 an ounce, and dipped as low as $1,677.03, up $12.39, or 0.74 percent, to settle at $1,697.62 an ounce.

Spot gold was up about $5 in intraday trading on Tuesday, touching as high as $1704.66 an ounce.

The Federal Reserve holds a two-day policy meeting this week. To cushion the impact of the coronavirus pandemic, the Federal Reserve injected massive stimulus and cut interest rates to near zero.

Td said it expected the tone of this week’s FOMC meeting to “remain dovish”, which could revive investor interest in gold. The underlying themes driving gold purchases have not changed and central Banks remain committed to maintaining current monetary policy for the foreseeable future.

Daniel Ghali, commodities strategist at TD Securities, said: “The Fed will continue its dovish policy and they will continue to hold down real interest rates, which have been the main driver of gold buying over the past few months.” He added that the macro impact would continue to support gold prices.

Gold fell 2.4 per cent to $1,670.14 an ounce on Friday, its lowest level in more than a month, after an unexpected surge in US jobs raised hopes of a rapid global recovery and boosted investor appetite for riskier assets.

Saxo Bank analyst Ole Hansen said gold’s rise was also technical. “Friday’s dip below $1,700 has again attracted some demand from investors who have been sitting on the sidelines, waiting for a correction.”

The price of gold rose sharply on Monday to above $1,691.10 an ounce, according to Economies.com, a leading financial website, and closed above that level, suggesting further gains are expected in the coming days.

With gold prices closing above $1,691.10 an ounce yesterday, this confirms a continued bullish bias, According to Economies.com. In that scenario, gold could hit its bullish target further, starting at $1,764.00 an ounce.

North Korea has announced that it will completely cut off and abolish all inter-Korean communication lines

The latest big news comes from North Korea. The DEMOCRATIC People’s Republic of Korea (DPRK) will close all communication channels between the Two koreas starting at noon on June 9, the KCNA reported.

On June 9, kcna news agency reported that the DPRK authorities will be starting on June 9, 2020 12 when cut off and the abolition of the liaison office has maintained jointly by north and South Korea’s authorities communication link between the koreas, between north and South Korea’s military sea communication link, the two koreas communications test link, the workers’ party of Korea Central Line communications link between the main building and the blue house.

Kim Yo-jong, first vice minister of the Workers’ Party of China (WPK), and Kim Yong-chol, vice chairman of the CPC Central Committee, stressed the importance of changing “work toward the ROK” to “work toward the enemy,” and issued instructions to close all communication channels between the two koreas, the report said.

Last week, North Korea threatened to “torture” Seoul. Ms Kim also demanded that South Korea immediately stop distributing leaflets on the north-south border (denouncing the Kim regime, human rights issues, North Korea’s nuclear ambitions, etc.) or the North would consider tearing up a military agreement aimed at easing border tensions during Mr Moon’s visit in 2018.

South Korea’s Unification Ministry said on June 7 that the DPRK condemned a group of defectors from the North to fly over anti-DPRK leaflets and decided to close the inter-Korean liaison office, saying that the ROK would remain committed to implementing the Panmunjom Declaration and other agreements reached by the DPRK and its leaders.

On June 4, KCNA reported that Kim Yo-Jong, first vice minister of the CENTRAL Committee of the Workers’ Party of Korea, on the same day strongly condemned “defectors” from the ROK who spread anti-DPRK leaflets to the DPRK.

Analysts said the latest news highlighted further tensions between north and South Korea, with gold often finding safe-haven support amid rising geopolitical tensions.

Will the Fed’s decision hit the dollar?

The FEDERAL Open Market Committee will announce its interest rate decision at 02:00 Beijing time on Thursday. Federal Reserve Chairman Colin Powell will hold a press conference at 02:30 Beijing time on Thursday. Markets expect the Fed to keep interest rates near zero.

The Fed will need to weigh signs that the impact on the economy has passed its worst against evidence that the virus itself is not under control.

Federal Reserve Chairman Colin Powell, in his final speech before a quiet period at the Central bank, said a surge in coronavirus infections in the United States could hamper the economy’s recovery from the deep recession caused by the pandemic, although he reiterated the Central bank’s commitment to continue to act to combat the crisis.

Morgan Stanley said in a research note on Saturday that this week’s Fed meeting is expected to add headwinds to the dollar, making further declines inevitable.

Morgan Stanley analysts said the bank expected the Fed to leave rates unchanged at this week’s meeting, while also watering down guidance on how long rates would stay low. Fed Chairman Colin Powell is expected to remain concerned about the economic outlook.

The bank’s analysts added: “Currency markets are already creating a lot of headwinds for the dollar as we approach the Fed’s June meeting. However, we don’t expect much to happen at this meeting. The overall tone should be slightly dovish, so the market should expect low rates to last longer. Given the recent weakness in the DOLLAR, coupled with such dovish expectations, we believe the DOLLAR index could fall further.”

The US dollar fell and commodity currencies rose on Monday as Friday’s strong US jobs report for May and optimism about a post-coronavirus recovery boosted risk appetite.

The U.S. dollar index.DXY closed 0.27 percent lower at 96.71 on Monday, having hit an intraday low of 96.60.

“The focus this week will be the Fed meeting, and we expect the tone to remain dovish as central Banks remain committed to maintaining their monetary support for the foreseeable future,” Bart Melek, strategist at TD Securities, wrote in a research note.

, however, analysts pointed out that, due to the latest U.S. non-farm payrolls report is very strong, and enhance the people’s confidence in the economic recovery, has prompted some exchange abandon the bet on a negative interest rates, the fed’s decision this week could strengthen refuse negative signals, even hawkish signals may release, if so, it is expected to prop up the dollar, thus a hit to gold.

Adam Button, managing director of ForexLive, expects gold prices to fall this week. “One of the risks in gold trading this week is that the Fed stressed that the economy is not as bad as feared and hinted that it will slow its stimulus efforts, which will further push Treasury yields higher and curb short-term safe-haven demand,” said Adam Button.

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