Gold jumps on rising US-North Korea tensions

Judith Bessette
Agosto 14, 2017

Traders took heart in a measure of USA consumer prices that increased only slightly in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

In Singapore, last month's non-oil domestic exports data due out on Thursday will be on traders' radar. Sony Corp. shares in Tokyo dropped 1.6 percent. The comments follow reports that the North has mastered a technology needed to strike the United States with a nuclear missile. The stock lost $142.20, to $1,906.80. It has weakened 1.5 percent since hitting a 2-1/2 year high of 1.1910 on August 2.

Heightened tensions between North Korea and the U.S. are negative factors in the local stock markets that could drag down the index, Cape Investment & Securities said in a report.

Other markets: Asian markets had another tough day (http://www.marketwatch.com/story/asian-markets-extend-selloff-in-face-of-north-korean-crisis-2017-08-10), while the Hong Kong Hang Seng Index and the South Korea Kospi dropped 2.5% and 3.2%, respectively, for the week. US and British equivalents were also trading a touch above Wednesday's six-week lows.

Ryu Yong-seok, a market analyst at KB Securities Co., said tensions between North Korea and the United States are partly to blame for the decline in the main index.

Another source of uncertainty is likely to be comments made by Mr Trump warning that U.S. military action is an option in Venezuela, which has been hit by economic and political strife.

Benchmark US 10-year notes last rose 6/32 in price to yield 2.1905 per cent, from 2.211 per cent late on Thursday.

To that end, gold prices shot up to near $1,300 an ounce - their highest level in several months. Economists polled by Reuters had forecast the CPI rising 0.2 percent in July.

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The benchmark US yield on Thursday was just above 2.2 percent, at its lowest level since late June, as investors bought up Treasuries, a classic safe harbor.

The greenback traded at 109.160 yen JPY= after slipping to 108.720 on Friday, its weakest since April 20.

The Swiss franc was on track for its biggest single-day rise against the euro in more than 2 1/2 years.

It also showed little reaction to second-quarter gross domestic product data which revealed that the economy expanded for a sixth straight quarter led by private consumption and capital expenditure. The lack of pickup in inflation, despite low unemployment, remains a mystery. The commodity touched over $1,284.40 an ounce on Wednesday, which marked the highest intraday price in nearly two months.

In Toronto, the composite index S&P/TSX has, nevertheless, yielded 40,87 points, to close at 15 033,38 points.

OIL: Benchmark U.S. crude lost 24 cents to $48.37 per barrel on the on the New York Mercantile Exchange while Brent crude, used to price global oils, declined 20 cents to $51.70 per barrel in London.

Gold climbed to the highest since mid-June, pushing up mining-company shares amid military tensions between the USA and North Korea. The dollar's recent weakness was also seen to be helping gold. But Mellor notes the rhetoric has reached a "different level".

Ten-year US yields dropped 4.3 basis points to 2.24 per cent and German equivalents fell 3 bps to 0.43 per cent, a six-week low.

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