North Korean tensions have dominated gold prices on Monday with the fresh spike in tensions triggering renewed demand for precious metals on defensive grounds.
The dollar recovered ground following an initial slide on the weaker than expected US employment report, although there was still a high degree of resilience with support above $1,320 per ounce.
The latest COT data recorded a further increase in the long, non-commercial gold position to above 231,000 in the latest week from just below 208,500 the previous week. This was the sixth successive significant increase in net long positions and the largest net position since October 2016.
The positioning data will expose gold to potentially aggressive selling if there is any net decline in fundamental support.
Gold, however, secured renewed support at the Asian open on Monday as risk aversion spiked higher once again.
The nuclear test from North Korea triggered a fresh surge in geo-political concerns, especially as the latest test was reported to be much larger than the previous nuclear tests.
There was a fresh surge in demand for defensive assets which had an important impact in boosting demand for gold.
The dollar overall was unable to gain any further traction which maintained underlying gold support and bond yields also edged lower.
From levels just below $1,325 per ounce, gold spiked higher at the open to a fresh 9-month peak close to $1,340 per ounce. Immediate fears eased very slightly during European trading, although there was only limited selling pressure.
Investor interest is likely to remain solid in the short term, especially if risk appetite remains significantly weaker, although there looks to be little value in chasing gold higher at current levels.
Gold Prices 4-Hour Chart