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Gold prices shot up on Monday to their highest in close to a year as investors bought safe-haven assets on worries that North Korea might launch more missiles after its sixth and largest nuclear test.
A weaker dollar also underpinned gold, which is likely to continue its upward momentum in the coming days, said Tom Kendall, head of precious metals strategy at ICBC Standard Bank.
"We've got the geopolitics and we've also got a fairly benign interest rate environment. There's still nothing threatening coming out of the Fed," he said, referring to the US central bank.
Gold is highly sensitive to rising interest rates because they increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which gold is priced.
Spot gold was up 0.6 per cent at $1,333.01 an ounce by 1415 GMT, having touched its strongest level since late September at $1,339.47.
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US gold futures for December delivery were up 0.6 per cent at $1,338.80.
South Korea said on Monday that it was talking to the United States about deploying aircraft carriers and strategic bombers to the Korean peninsula after signs that North Korea might launch more missiles.
A key target for spot gold was around $1,375, the high reached after last year's Brexit vote, Kendall added.
"If you've got a momentum-type trading model, things have been pretty good," he said. "It's not looking overextended or overbought just yet, so I think we can definitely get up to that $1,375 level."
Stephanie Aymes, head of technical analysis at Societe Generale, pegged another key level for gold at $1,350/$1,356, based on a multi-year "inverse head and shoulders" formation.
"This will be a major hurdle to be watched out for," she said in a note.
The Japanese yen and sovereign bonds also climbed on Monday as North Korea's nuclear test provoked a knee-jerk shift to assets perceived as less risky while stocks markets fell.
Silver rose 0.7 per cent to $17.81 an ounce, having hit its highest since late April at $17.90.
Platinum gained 0.2 per cent to $1,006. It had previously marked its best since early March at $1,014.70.
Palladium dipped 0.3 per cent to $978 after touching $1,001, its highest since February 2001.
The metal used in catalytic converters surged 5 per cent on Friday, registering its biggest one-day jump since March 2016 after some US automakers reported better than expected August sales and on an expected rise in demand from Houston to replace flood-damaged vehicles after Hurricane Harvey.
"The way palladium has moved and the speed at which it's moved since the beginning of August, I think it's getting to the point at which you would be very cautious of a significant correction back into the mid to low 900s over the next month or so," Kendall said.
