Gold holds gains in Asia with North Korea tension setting the tone

Judith Bessette
Agosto 12, 2017

A Reuters Datastream index of more than 7,000 stocks across the globe saw its market capitalization drop from a record high $61.36 trillion on Monday to $60.43 trillion at the close on Thursday.

The yen has also registered its biggest weekly gain since May against the dollar amid speculation that investors of Japan, as the biggest creditor nation, would repatriate their funds should a war break out.

Japan's Topix index had the biggest slide in nearly three months, falling 1.3 per cent on trading volume 22 per cent higher than the 30-day average at the close.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent in early trading, while Japan's Nikkei was 1.2 percent lower as the stronger yen sapped investors' appetite.

The modest rebound came at the end of a turbulent week on Wall Street as escalating tensions between the US and North Korea rattled global markets. It would be ideal for the precious metals if the dollar were to weaken again now, and that could happen courtesy if United States economic data is weaker.

Fawad Razaqzada of Forex.com told Reuters "the war of words between the leaders of the US and North Korea continue to dominate investor sentiment".

South Korea's KOSPI fell 1.7 per cent on Friday to its lowest since May 24, but its losses for the week were a relatively modest 3.2 per cent.

Sterling touched a three-week low against the dollar as a mixed bag of output and trade data did little to alter investors' downbeat view of an economy struggling to meet Bank of England targets.

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Markets are now awaiting U.S. consumer price data for July, due later today.

The Japanese yen strengthened by 0.5% to about 109.70 per dollar.

European equities on Thursday did not find much relief from a pullback in the euro, with the shared currency buying $1.1730, down from $1.760 late Wednesday in NY. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 2.215%.

The price of gold also surged for the second day in a row as the December bullion contract advanced $10.80 U.S.to $1,290.10 U.S.an ounce.

The latest United States economic data cemented expectations that inflation will remain subdued amid a robust labour market. The white metal's almost 3% rise Wednesday was the sharpest daily gain since September 21, 2016, according to FactSet data.

Excluding energy and food prices, core PPI fell by 0.1% month-on-month, while analysts anticipated the index to rise by 0.1 percentage points to 0.2%.

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

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