Gold Rises Along With North Korea Tensions

Persistent gold buying by local jewellers at domestic spot market stoked uptrend

Persistent gold buying by local jewellers at domestic spot market stoked uptrend

US President Donald Trump's warning to North Korea has given gold momentum; investors are also awaiting US inflation data.

FIRE AND FURY: Keeping up his tough talk, Trump told reporters that North Korean leader Kim Jong Un's government should "get their act together" or face extraordinary trouble, and suggested his earlier threat to unleash "fire and fury" on North Korea was too mild.

US stocks rose Friday but still notched their biggest weekly loss in months, as investors were shaken by disappointing earnings results and an escalation of threats between the USA and North Korea.

This week's increase in tension between North Korea and the US over North Korea's nuclear missile programme is a timely warning for investors to remain diversified, affirms a leading analyst.

US government bonds strengthened Friday as soft inflation data led investors to further scale back expectations for interest-rate increases from the Federal Reserve.

South Korean shares, which have been among the strongest performers in the world so far this year, fell 1 percent, while the won lost around 0.6 percent to 1,134.70 to the dollar.

USA stock indexes opened lower on Wednesday as investors turned risk averse. Randgold Resources Ltd. and Barrick Gold Corp. were among the best performers, each gaining more than 1.4 percent. Bond and gold prices, traditional havens for nervous investors, were little changed, and the VIX, a measure of how much volatility investors expect in stocks, fell 3.3 percent following a 44.4 percent jump the day before.

The Labor Department said its consumer price index inched up by 0.1 percent in July after coming in unchanged in June. The NYSE Arca Biotechnology Index plunged by 3.4% to its lowest closing level in well over a month. The Dow slumped by 1.1 percent, while the Nasdaq and the S&P 500 tumbled by 1.5 percent and 1.4 percent, respectively.

"Today's inflation data put the Fed on pause and really diminishes the fact that there's still some noise going around with the North Korea-U.S. situation", said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.

The Japanese yen strengthened by 0.5% to about 109.70 per dollar. The Russell 2000 index gave up 24.40 points, or 1.8 percent, to 1,372.54. They will be looking for further clues about interest rate hikes from the US Federal Reserve later this year. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.3 basis points to 2.189 percent. The price of gold rose 1.2 percent and the Swiss franc had its best day in almost three years. The euro fell to $1.1728 from $1.1757. The company also said sales at its established stores declined for the fourth-straight quarter.

This morning global stocks declined for the second day in a row, with the FTSE 100 falling 0.8 per cent to 7,327 points in early trading, while the Dax fell 0.2 per cent and the Cac 40 fell 0.6 per cent.

According to analyst Simona Gambarini, the price of gold "tends to rise in anticipation of a conflict but often falls when tensions turn into a full-blown war".

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