Gold buoyed by global tensions, USA inflation data

Judith Bessette
Agosto 14, 2017

US stock indexes were set to open little changed on Friday, with the S&P 500 on track to post its biggest weekly loss in nine months, as investors remained cautious on heightened tensions between the United States and North Korea.

Investors have been jittery about North Korea since Tuesday when Trump said any threats from Pyongyang would be "met with fire and fury like the world has never seen". USA crude was down 0.9 percent at $48.16 per barrel, on track for a weekly loss of 2.9 percent.

On Thursday, New York Fed President William Dudley said he expects sluggish U.S. inflation to rise over the next several months while the hot labor market gets even hotter. Hong Kong's Hang Seng Index plummeted 560.49 points or 2% to 26,883.51.

At its worst, the FTSE 100 was down 121 points, or 1.6%, at around 3pm, also pressured by some companies going ex-dividend, and disappointing export and construction data.

Simmering tensions between the USA and North Korea have come back to the boil in recent days after Pyongyang disclosed plans to fire missiles over Japan to land near America's Pacific territory of Guam. Ten-year USA yields dropped 4.3 basis points to 2.24 percent and German equivalents fell 3 bps to 0.43 percent, a six-week low.

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"There's not a fundamental reason why what we're seeing out of North Korea right now should affect stock market prices, but it's being used as the reason to sell off right now because we've been looking for it for so long", Schiegoleit said.

It is "a bullish sign that the equity markets are rebounding somewhat on a Friday, in spite of the fact that investors will need to wait for two days to react to any geopolitical news that comes out over the weekend", said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.

Semiconductor, computer hardware, oil service, and retail stocks also saw considerable weakness, moving lower along with most of the other major sectors. A plunge in Tokyo stocks on Wednesday morning also dampened traders' risk appetite and spurred yen buying, brokers said. That "looks high enough to be consistent with a 5 percent-plus pace for real GDP growth", Jim O'Sullivan of High Frequency Economics said in a report.

"A quick unwinding of prices to below $1,250 an ounce is very possible, especially if the tensions ease quickly and if global growth continues performing the way it is, with most incoming economic data suggesting a rosy economic outlook". Away from the geopolitical drama, US inflation data is due at 1330 GMT.

The Canadian dollar was trading at an average price of 78.67 cents USA, down 0.04 of a U.S. cent. This morning gold had reached $1,286.33 while gold for delivery in December rose 0.8% to $1,290.10. USA gold futures gained 0.50 percent to $1,296.60 an ounce. The euro edged down to $1.1727 from $1.1751. Bent crude, the global benchmark, rose 19 cents to $52.33 a barrel.

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