Goldman Sachs has ruled out that the geopolitical tensions created by North Korea's missile and nuclear tests are the real reason for the recent rise in gold prices, some believe.
"The US dollar and uncertainty caused by President Donald Trump led the yellow metal to rise," analysts said in a note issued by the bank. "This trend is on the way to fading," he said, pointing out that spot gold prices rose from $ 1212 an ounce last July To $ 1342 this week, marking the highest level in almost a year.
The precious metal's gains coincided with increasing tension on the Korean peninsula, which escalated with Pyongyang conducting a successful test of the hydrogen bomb over the weekend.
However, Goldman Sachs said through its analysts: "The rise in gold prices has nothing to do with the tensions created by North Korea," he said, adding that only about $ 15 of an increase of more than $ 100 in the price of the yellow metal was linked to the threat posed by Pyongyang.
"We see that the events in Washington over the last two months have played a bigger role in the recent rise in gold, followed by the weakness of the dollar, which suggests that this bullish wave will soon be over.
He added that he was committed to his outlook for gold prices, which he believes will reach $ 1,250 an ounce by the end of this year, if escalating the dispute with North Korea.
Gold rose on Thursday after US President Donald Trump signed an agreement with Democratic opposition lawmakers on a temporary extension of the US debt ceiling, contributing to the dollar's fall.
Continued tensions with North Korea over its nuclear tests provided further support for gold, which is seen as a safe haven ahead of a meeting of the European Central Bank.
Spot gold rose 0.5% to $ 1339.79 an ounce after falling 0.3% in the previous session.
Gold futures for December delivery rose 0.4% to $ 1344.60 an ounce.
The dollar index fell to 91.856, its lowest since August 29.
Investors are also closely following the results of a meeting of the ECB on monetary policy, while European Central Bank President Mario Draghi is expected to pave the way for a cut in monetary stimulus.
Among other precious metals, silver rose 0.3% to $ 17.88 an ounce while platinum fell 0.2% to $ 1001.45 an ounce.
Palladium rose 0.3 percent to $ 942.25 an ounce.