Gold buoyed by North Korea tensions, USA inflation data

The dollar skidded to an eight-week low against the yen as escalating tensions between the United States and North Korea triggered yet more investor flight to safety.

President Donald Trump warned North Korea again on Thursday not to strike Guam or USA allies, saying his earlier threat to unleash “fire and fury” on Pyongyang if it launched an attack may not have been tough enough.

Australian shares were down 1.3 percent, set for a weekly loss of 0.6 percent and Chinese and Hong Kong bluechips lost 1.6 percent and 1.9 percent respectively. Australia’s S&P/ASX 200 dropped 1.2 percent, while Japan was closed on a public holiday.

Many world stock markets have hit record or multi-year highs in recent weeks, leaving them vulnerable to a sell-off, and the tensions over North Korea have proved the trigger. USA gold futures gained 0.26 percent to $1,293.50 an ounce.

“Of course, it’s all come at a time when share markets are due for a correction, so North Korea has provided a flawless 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.

Dollar/yen was last trading at 109.2, gold was at $1,285.75 an ounce, dollar/franc was at 0.9625.

Trump’s words were in response to North Korea threatening to attack US territory Guam.

“While the U.S. President insists on ramping up the war of words, there is a decreasing chance of any diplomatic solution”, Carnell said.

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

The index was also dragged lower after Beijing ordered probes into three major Chinese social networking platforms over outlawed content.

The pan-European FTSEurofirst 300 index lost 1.06 percent and MSCI’s gauge of stocks across the globe shed 0.17 percent.

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”.

For now, the dollar remained on the back foot, pulling back 0.1 percent to 0.9635 Swiss francs on Friday, after dropping as much as 1.2 percent to a two-week low overnight.

The dollar index (.DXY), which measures the USA currency against a basket of other major currencies, fell 0.14 percent.

Benchmark 10-year notes last rose 5/32 in price to yield 2.194 percent, from 2.211 percent late on Thursday.

Spot gold prices were little changed at $1,286.05 an ounce, after touching a two-month high earlier. This week has seen its biggest rise since June 2016.

Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in USA crude inventories.

US crude rose 0.41 percent to $48.79 per barrel and Brent was last at $52.01, up 0.21 percent.

The Korean won continued to fall versus the dollar, down 0.13 per cent to 1,143.5 on Friday for a 1.6 per cent decline on the week.