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Gold Rises As Markets React To Chinese Seizure Of An American Drone

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Gold Rises As Markets React To Chinese Seizure Of An American Drone

Gold was spiking on Friday trading after a ship from the Chinese Navy captured an underwater drone a U.S. oceanographic vessel had deployed in the South China Sea. The unmanned vehicle was seized approximately 50 nautical miles northwest off of the Philippines’ Subic Bay.

The Situation

U.S. officials told Reuters that the North American country has issued a formal diplomatic demarche (protest) and demanded the drone’s return. "The UUV was lawfully conducting a military survey in the waters of the South China Sea," one of the officials declared. "It's a sovereign immune vessel, clearly marked in English not to be removed from the water — that it was U.S. property.”

A few hours later, the U.S. Pentagon confirmed the event, adding that the drone in question was not military, although it was owned by the U.S. military, and used commercially available technology. The agency added that the device cost about $150,000.

"It is ours, and it is clearly marked as ours and we would like it back. And we would like this not to happen again," Pentagon spokesman Jeff Davis supplemented.

"This move, if accurately reported, is highly escalatory, and it is hard to see how Beijing will justify it legally," Mira Rapp-Hooper, an Asia-Pacific Security expert, explicated.

Stock Reaction

Perhaps in a psychological reaction amid the potential international implications of the event, investors may be running toward safe havens such as gold. The SPDR Gold Trust (ETF) (NYSE: GLD) traded up 0.85 percent on Friday afternoon, rebounding from this week's lows following the Fed's interest rate hike.

 

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