Published: Sun, August 13, 2017
Global News | By Stacy Ballard

Gold buoyed by North Korea tensions, USA inflation data

Gold buoyed by North Korea tensions, USA inflation data

Gold futures continued to rise Friday morning, ahead of inflation data and as tensions between North Korea and the US escalated.

While the President of the United States, Donald Trump said that any North Korean threat will be met with fire and fury, likes of which the world has never seen before, North Korea state-owned news agency said that a plan is being chalked out by North Korean military to strike Guam, which is a U.S. overseas territory in Western Pacific Ocean and holds large naval and air-force base. WTI was last trading at $48.30 a barrel (down 0.60%) and Brent was at $51.63 (down 0.52%).

MSCI's broadest index of Asia-Pacific shares outside Japan skidded 1.55 percent, its biggest one-day loss since mid-December. It soared over 2 percent in the previous two sessions, and is set for a weekly gain of 2.25 percent. US gold futures for December delivery was mostly unchanged at $1,290.50 per ounce.

"Of course, it's all come at a time when share markets are due for a correction, so North Korea has provided a ideal trigger".

South Korea's KOSPI fell 1.8 percent to an 11-1/2-week low, taking its losses this week to 3.2 percent.

The Dow Jones Industrial Average rose 44.33 points, or 0.2 percent, to 21,888.34, the S&P 500 gained 6.01 points, or 0.25 percent, to 2,444.22 and the Nasdaq Composite added 32.10 points, or 0.52 percent, to 6,248.97. It is poised to end the week down 1.9 percent.

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A Chinese state-run newspaper said on Friday that China should make clear that it will stay neutral if North Korea launches an attack that threatens the United States, but that if the USA attacks first and tries to overthrow North Korea's government, China will prevent it doing so.

Trump's threat earlier this week, to unleash "fire and fury" on Pyongyang if it attacked, was ultimately dismissed as bluster by many investors.

The CBOE Volatility Index, the most widely followed barometer of expected near-term US stock market volatility, rose the most in about 12 weeks.

"We're still close to the all-time high so that makes people a little nervous too, so they might say now might be the time to take a little bit of money off the table".

The dollar widened losses against the yen to hit a two-month low.

The dollar was down 0.77 percent against the yen at 109.21 yen.

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The yen tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation and there is an assumption that Japanese investors there will repatriate funds should a crisis materialise.

"Gold and silver are higher, thanks mainly to their status as safe-haven commodities". "North Korean tensions continue to escalate", leaving the Swiss Franc, and possibly the US dollar, as the remaining beneficiaries of risk aversion, Emmanuel Ng, currency strategist at OCBC Bank in Singapore, wrote in a note. The demand for the Swiss franc also rose, with the franc strengthening against the dollar and the euro.

The dollar index slipped to a one-week low on Friday after the United States data.

The dollar was up 0.05 percent to 109.25 yen, after earlier falling to a sixteen-week low following data showing USA consumer prices rose less than expected in July.

Spot gold (XAU=) added 0.7 percent to $1,286.00 an ounce. It was on course for a weekly rise of about 5%, the biggest such gain since July 2016.

Crude oil prices tumbled on the back of the selloff on Wall Street and lingering concerns over global oversupply.

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