Gold steady near 2-month highs on N. Korea tensions

Cornelia Mascio
Agosto 12, 2017

Increased geopolitical tensions between North Korea and the United States, which were intensified by a sort of war of words, decreased the risk appetite in the market and increased selling pressures.

Below, the Associated Press' bureau chiefs for North and South Korea discuss the North's stated plans to send test missiles close to the USA territory of Guam, and President Donald Trump's vow to unleash "fire and fury" on Pyongyang if it continues to threaten America.

The Dow Jones Industrial Average fell 94.55 points, or 0.43 per cent, to 21,954.15, the S&P 500 lost 19.51 points, or 0.79 per cent, to 2,454.51 and the Nasdaq Composite dropped 76.39 points, or 1.2 per cent, to 6,275.94. Australia's S&P/ASX 200 edged down almost 0.1 percent to 5,760.90, while South Korea's Kospi fell 0.5 percent to 2,357.84. U.S. President Donald Trump said North Korea should be "very, very nervous" if it even thinks about attacking the U.S. or its allies after Pyongyang said it was making plans to fire missiles over Japan to land near the U.S. Pacific territory of Guam.

Many world stock markets have hit record or multi-year highs in recent weeks, leaving them vulnerable to a selloff, and the tensions over North Korea have proved to be the trigger.

The pan-European FTSEurofirst 300 index lost 1.01 per cent and MSCI's gauge of stocks across the globe shed 0.26 per cent for a weekly loss of 1.6 per cent, the largest since the week to November 4.

"When investors are optimistic to the extreme, it means that most of their money is already in the market and there's no more money coming in", Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida.

For now, the dollar remains on the back foot, pulling back 0.1% to 0.9635 Swiss francs today, after dropping as much as 1.2% to a two-week low overnight. The index bounced off its lowest closing level in six months.

The dollar index slipped to a one-week low on Friday after the U.S. data.

The Canadian dollar was trading at 78.64 cents U.S., down from an average price of 78.71 cents USA on Wednesday. The index had its biggest drop since mid-May a day earlier. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.3 basis points to 2.189 percent.

The euro eased 0.1 per cent to $1.1766, staying below a high of around $1.1910 set last week, the euro's strongest level in 2-1/2 years.

However, market watchers said equity markets remained focused on the deepening geopolitical crisis, as angry threats from Washington and Pyongyang stoke fears of a catastrophic miscalculation with global consequences. Brent crude was up 80 cents at $53.50 a barrel and U.S. crude was up 60 cents and back up to $50.

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