Far East Tensions Cause Gold Prices to Perk

The Federal Reserve, which raised its key interest rate in March and June, has signaled it plans a third rate hike before the end of this year.

"The slight bias to the upside (in stocks) is a result of the CPI number".

Overseas markets were also lower Wednesday.

With the tense mood pushing European shares down for a third day and Wall Street set to fall again, global stocks were on course for their worst week since Donald Trump won November's United States presidential election.

"It's been a bit of a roller coaster this week, with all the rhetoric between the U.S. and North Korea", said Jeff Kravetz, regional investment strategist at U.S. Bank Wealth Management.

"There's not a great incentive to buy big", said Lerner of SunTrust Advisory. According to the Associated Press, South Korea's Kospi lost 1.7 percent, while Hong Kong's Hang Seng slid 2 percent.

The S&P 500 dropped 1.4% to 2438.21, while the Dow Jones Industrial Average fell 204.69 points, or 0.9%, to 21,844.01.

Most large-cap stocks fell across the board.

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But safe havens benefited from the move away from stocks with gold rising by just under one percent after surging 1.3 percent Wednesday.

USD/JPY also remained under pressure with a dip below the 109.00 level for fresh 8-week lows and this combination inevitably put further upward pressure on gold.

The three major USA indices have sold off this week amid investors' jitters after Trump said on Tuesday that threats from Pyongyang would be "met with fire and fury like the world has never seen".

There were falls of almost 2% on South Korea's Kospi and Hong Kong's Hang Seng, with markets in mainland China and Australia also down - taking their cues from sharp losses on Wall Street earlier.

"The tension between the U.S. and North Korea is still dominating the news and it is looming over the financial markets", said David Madden, market analyst at CMC Markets UK.

USA stock-index benchmarks opened slightly higher on Friday, but equities were on pace for its ugliest week in months amid intensifying rhetoric between the US and North Korea.

USA gold futures for December delivery rose 0.2 percent to $1,291.80 per ounce.

"In the event that war should break out, and that leads to an acceptance of further loose monetary and fiscal policy in the USA, we would expect a falling U.S. dollar real yield environment, giving renewed, and sustainable, impetus to monetary metals prices".

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The Nasdaq finished the day at 6,216.87, a slide of 135.46, while the S&P 500 lost almost 1.5 percent, ending the day at 2,438.21. Dillard's slumped 15.5 percent after the chain booked a loss for the second quarter as increased inventory led to big discounts.

"If the data continues to come in on the softer side, the market might start to price the Fed staying on hold this year", said Sireen Harajli, FX strategist at Mizuho in NY. The Russell 2000 index of smaller-company stocks gave up 13.20 points, or 0.9 percent, to 1,396.95. The annual rate stood at 1.8%, which was below the 1.9% observed last month and the forecast of 2.1%.

Disappointing listed-company earnings for the second quarter, largely due to weaker-than-expected net profits of large firms, also dampened investors' risk appetite, Mr Chaiyaporn said. The next key data on focus will be tomorrow's CPI figures which should shed more light on the path of the United States inflation.

Spot gold added 0.7 per cent to $1,285.70 an ounce. It was on course for a weekly rise of about 5%, the biggest such gain since July 2016.

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

Elsewhere in commodities, the September crude contract was up 39 cents to US$49.56 per barrel, September natural gas advanced six cents at US$2.88 per mmBTU and the September copper contract declined two cents at US$2.93 a pound.

Keeping up his tough talk, U.S. President Donald Trump told reporters that North Korean leader Kim Jong Un's government should "get their act together" or face the consequences, and suggested that his earlier threat to unleash "fire and fury" on North Korea was too mild. Since the beginning of 2017, the barometer index of the S&P 500 had only two sessions of declines of 1 % or more. Germany's DAX fared better, trading only 0.2 percent lower at 11,989. The euro zone's version is at its highest since April, when France's election was rattling the region.

Japanese, British and USA 10-year government bond yields are also at or close to their lowest level since late June.

The VIX measure for volatility was also up for the day, while the U.S. dollar was marginally down against sterling.

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Later on Friday, the US will release inflation data for the month of July.

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