Gold buoyed by North Korea tensions, United States inflation data

14 August, 2017, 07:19 | Author: Leticia Walters
  • Investors move to safe havens as US and North Korea trade threats

South Korea's KOSPI fell 1.8 per cent to a 9 1/2-week low, taking its losses this week to almost 2.7 per cent.

Gold added to early gains, and the dollar pulled back, following the release of US data showing a cooler reading for inflation at the wholesale level.

The pan-European FTSEurofirst 300 index lost 1.11 percent.

Australian shares were down 1.5 percent, set for a weekly loss of 0.8 percent.

In an unusually quiet day of currency trading, it was the smaller emerging market currencies that stole numerous headlines.

In terms of forex market movements, the United States currency lost significant ground relative to majors including the yen, sterling and the euro - most notably the latter one - as the news on inflation went public.

"Both (PPI measures) were well below consensus and give us no hope that consumer price inflation is going to materially beat expectations", said Chris Weston, chief market strategist at IG Markets.

While North Korea regularly threatens to destroy the United States and its allies, the report was unusual in its detail.

"Gold and silver are higher, thanks mainly to their status as safe-haven commodities".

While the conflict between the two countries remains a war of words markets are wary that the threat could escalate, in no small part to the unpredictability of the respective leaders, Trump and Kim Jong Un.

United States stock futures were 0.1 per cent lower on Friday.

"The war of words between the leaders of the USA and North Korea continues to dominate investor sentiment", said Forex.com technical analyst Fawad Razaqzada. That prompted North Korea to say it was considering firing missiles at Guam, a USA -held Pacific island.

"U.S. markets had previously been becalmed amidst the Goldilocks scenario of strong profit growth, low interest rates and full valuations". "It's hard to tell whether this could trigger a stronger bout of risk aversion".

The Japanese yen hit an eight-week high against the US dollar, and USA -traded Nikkei stock futures dropped 2 percent to their lowest since mid May. Most Japanese companies expect the pair to trade between 108-110 yen this fiscal year.

European equity markets continued to lose ground on Thursday which provided further net support to gold, especially with bond yields tending to drift lower.

U.S. Treasury yields US10YT=RR fell to as low as 2.197 percent, their lowest level since June 28, overnight.

The dollar eased slightly against a basket of major currencies .DXY to 93.356.

Gold prices traded at their highest level in more than two months Thursday, adding to the previous session's sharpest daily rise since the middle of May, as simmering North Korean tensions underpinned haven investments. In commodities, crude oil lost momentum after rising overnight on data pointing to declining US inventories. They plunged 2 percent on Thursday on fears of slowing demand and lingering concerns over a global oversupply.

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