Yesterday, North Korea fired several hundred rounds of artillery onto a South Korean island. As a result, gold rose over 1% for the day. At 3:50pm EST, gold futures were up 1.3% to US$1,375.4/ounce. Earlier in the day, it was as high as over $1,382.
Today, the situation is calming on the Korean Peninsula. However, the euro zone crisis continues. Investors are now looking beyond Ireland to the next shoe to drop. Concerns about Portugal and Spain's sovereign debt situation are pushing the countries' government bond spreads to record highs. For example, Spanish spreads over German debt are at a record high of 230 basis points.
If the situation in Greece in May was any indication, the situation in Ireland, Portugal and Spain are not going to be solved quickly. Thus, investors can expect euro zone worries to drive equities lower and gold higher in the coming week.