North Korea talk drags stocks lower; gold, yen rise

Reuters

Reuters

Johannesburg/London - Gold prices climbed to two-month highs on Friday as investors sought refuge from escalating tensions between North Korea and the United States, while bullion also received support from weak USA inflation data.

European markets also slid in early trade after Wall Street indices suffered their biggest losses in almost three months Thursday, while the dollar struggled to recover from eight-week lows below 109 yen as investors fled to safe haven assets.

"We're not very oversold yet so the market still has more downside left to it".

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.

Meanwhile, gold demand in India remained sluggish this week as local prices jumped to their highest level in almost three months and a rally in global prices dampened fresh buying elsewhere in Asia.

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"We're still close to the all-time high so that makes people a little nervous too, so they might say now might be the time to take a little bit of money off the table".

Gold, another classic safe haven asset, was trading at around $1,285 per ounce, up more than two per cent this week and near a nine-week high.

The benchmark Korea Composite Stock Price Index lost 39.76 points, or 1.69 percent, to 2,319.71. The Korean won fell against the USA dollar.

Below that level lies another key support level for the dollar on technical charts at 108.13 yen, a trough the greenback touched in mid-April.

"The yen is the big story really".

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"Risk-off sentiment dominates Asian markets into the end of the week with President Donald Trump's words still sending shockwaves into the markets", said Jingyi Pan, market strategist at online trader IG.

The dollar weakened after news that USA producer prices unexpectedly fell in July, recording their biggest drop in almost a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.

The dollar index, which measures the USA currency against a basket of other major currencies, fell 0.14 percent. -North Korea tensions and the weak data that further reduced expectations of a Fed rate hike in December.

Bond prices, which move inversely to yields, closed higher.

USA crude was unchanged at $48.59 per barrel and Brent was last at $51.84, down 1.63 percent on the day.

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Geopolitical risks can boost demand for assets considered safe-haven investments, such as gold.

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