Economy

Gold buoyed by North Korea tensions, U.S. inflation data

Gold buoyed by North Korea tensions, U.S. inflation data

The Swiss franc and the Japanese yen are often sought in times of geopolitical tension and have logged big gains against the dollar this week after U.S. President Donald Trump warned North Korea that it would face "fire and fury" if it threatened the United States.

Hope that the Fed will have to slow its rate hike path appeared to stop, at least for now, the near $1-trillion loss in world stocks valuations this week triggered by the war of words between Pyongyang and the United States. This led to gold hitting a fresh nine-week high of $1,288.84 an ounce and pushed the dollar/yen pair down through the 109 level.

"I do think I expect inflation to also start to move higher in the medium term but probably not get all the way back to 2-percent on a year-over-year basis, because, remember, we've had these very weak inflation readings for a number of month", Dudley said.

Gold got an extra boost after data showed USA consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

The MSCI World index slipped 0.15 percent, extending Thursday's 1.1 percent drop, its biggest one-day slide since May 17. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.47 percent lower.

The yen is perceived as a safe haven because Japan is the world's biggest creditor country and investors there have tended to repatriate funds in times of crisis.

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Landslides and flooding are common in the Himalayan region during the monsoon season, which runs from June through September. The water level in various rivers increasing and some are flowing above the danger mark.

Chinese bluechips lost 1.6 percent, while Hong Kong's Hang Seng was 1.9 percent lower. "Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay.

The dollar was further weighed down on Friday by the soft USA inflation data.

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

"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.

Sterling was last trading at $1.3007, up 0.25 percent on the day.

The Labor Department said on Friday the Consumer Price Index (CPI) edged up 0.1% last month after being unchanged in June.

NZX50 drops 1% as North Korean tension escalates
However, the market changed its direction after President Trump warned North Korea that threats will be "met with fire and fury ". Avis Budget Group Inc. slumped 9.9 percent after the vehicle rental company cut its guidance following a weak second quarter.

The dollar index fell 0.32 percent, with the euro up 0.42 percent to $1.1819.

Benchmark US 10-year notes last rose 6/32 in price to yield 2.1905 per cent, from 2.211 per cent late on Thursday.

The 30-year bond last /32 in price to yield 2.7933 percent, from 2.794 percent late on Thursday.

Spot gold was up 0.1% at $1,287 per ounce by 2.17pm GMT, set for its biggest weekly gain since April.

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

"What has changed this time is that the scary threats and war of words between the US and North Korea have intensified to the point that markets can't ignore it", said Shane Oliver, head of investment strategy at AMP Capital in Sydney.

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Arsene Wenger raised eyebrows last week when he said it was an "ideal situation" having players in their final year at the club. Neville said on Sky Sports . "We kept the faith and kept believing in our game to push hard".

US crude was down 0.9 percent at $48.16 per barrel, on track for a weekly loss of 2.9 percent.


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