Gold steady near 2-mth highs as N. Korea tensions continue

Patrice Gainsbourg
Agosto 13, 2017

Markets in Asia woke up to news that President Trump increased his verbal threat to North Korea by saying that his earlier comment about "fire and fury" was not "tough enough" and how North Korea "better get their act together or they're going to be in trouble like few nations ever have been in trouble in this world".

Japanese markets were closed for a holiday, but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe posted its largest weekly drop since the week before Donald Trump won the presidential election in November.

The yen is perceived as a safe haven because Japan is the world's biggest creditor country and investors there have tended to repatriate funds in times of crisis.

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.

US crude (CLc1) was unchanged at $48.59 per barrel and Brent (LCOc1) was last at $51.84, down 1.63 percent on the day.

"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".

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 US attacks first and tries to overthrow North Korea's government, China will prevent it doing so.

Disappointing economic data releases weighed on both sides of the Atlantic today with a negative goods trade balance for the United Kingdom (-0.1% versus expectations of 1.4%), higher unemployment claims from the U.S. (244,000) and also a negative month-on-month PPI figure for the USA (-0.1%).

Chinese bluechips lost 1.6 percent, while Hong Kong's Hang Seng was 1.9 percent lower.

The S&P 500 dropped the most since May and MSCI's gauge of stocks across the globe .MIWD00000PUS lost 1.1 percent in its third straight day of declines, as it pulled further back from all-time highs.

S. Korea, US, Japan vow to fully implement new NK sanctions
Beforehand, he had called at the Security Council for countries to cut diplomatic and financial ties with Pyongyang. Secretary of State Rex Tillerson said new United Nations sanctions targeting North Korea are a "very good outcome".

The dollar index fell 0.32 per cent, with the euro up 0.42 per cent to US$1.1819.

The dollar last changed hands at 108.96 yen, down 0.2 percent.

The Swiss franc, the other traditional safety-play among currencies, has benefited too.

Investor focus now turns to Friday's United States consumer price index data.

USA producer prices unexpectedly recorded their biggest drop in almost a year, and the number of Americans filing for unemployment benefits unexpectedly rose last week.

After touching a more than two-month high at US$1,291.86, spot gold last added 0.2 per cent to US$1,288.81 an ounce. It was on course for a weekly rise of about 5%, the biggest such gain since July 2016.

Crude futures meanwhile extended losses on fears of slowing demand and lingering concerns over global oversupply.

Global benchmark Brent also fell 0.9 percent to $51.44, after Thursday's 1.5 percent drop.

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

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