Gold Closes at One-Week High as North Korea Talk Grows Heated

Gladys Abbott
August 12, 2017

It was up about 2% for the week so far.

The strength on Wall Street is partly due to bargain hunting, with traders picking up stocks at reduced levels following the pullback seen over the past few sessions.

The Labor Department said on Friday the Consumer Price Index (CPI) edged up 0.1% last month after being unchanged in June. Northern Star Resources was up 3 per cent, while Evolution Mining rose 2 per cent, Newcrest Mining gained 2.3 per cent and Resolute Mining rose 2.1 per cent. Westgold Resources was the biggest gainer, rising 6.6 per cent. This downfall, which was the biggest one in 11 months, surprised analysts who expected producer prices to climb by 0.1% instead as with a month ago.

US DATA: The other potential driver in markets will be upcoming USA economic data, including monthly inflation figures, which could go a long way to determining expectations for the pace at which the Federal Reserve raises interest rates.

Meanwhile, President Donald Trump intensified his rhetoric, saying North Korea should be "very, very nervous" if it does anything to the US.

"There is a continuation of flight to the safe havens after remarks on Thursday evening from Trump about North Korea", said Quantitative Commodity Research consultant Peter Fertig.

Many world stock markets have hit record or multiyear highs in recent weeks, leaving them vulnerable to a sell-off, and the tensions over North Korea proved to be the trigger. "The unpredictable nature of North Korea means it is hard to gauge exactly how likely an attack is. Hopefully Kim Jong Un will find another path!" Australia's S&P/ASX 200 dropped 1.2 percent, while Japan was closed on a public holiday. Genesee & Wyoming (GWR) is posting a notable gain after reporting an increase in July traffic.

More news: How three recent launches signaled new leaps in North Korea's missile capabilities

The index was also dragged lower after Beijing ordered probes into three major Chinese social networking platforms over outlawed content.

The Korean won also continued to fall, down 0.45 percent to 1,147.2.

Trucking, biotechnology, and railroad stocks are also seeing notable strength, while steel stocks have moved sharply lower. "The market is interpreting it as lowering the odds of the Fed raising rates in December", said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta. Chinese blue chips closed flat but Hong Kong's Hang Seng Index fell 0.4%.

Germany's DAX dropped 0.3 percent to 12,117.07 and the CAC 40 of France lost 0.3 percent to 5,132.22.

In the bond market, treasuries are extending the upward move seen over the two previous sessions.

Benchmark 10-year notes last rose 5/32 in price to yield 2.194 percent, from 2.211 percent late on Thursday.

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