Gold, silver futures settle higher

Share

Global stock markets ended their worst week in months amid rising tensions between the USA and North Korea, though US stock indexes steadied on Friday to close up slightly. It is heading for a 2.5% drop for the week.

Japanese markets were closed for a holiday but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe was on track to post its largest weekly drop since the week before Donald Trump won the USA presidential election in November.

A Reuters Datastream index of more than 7,000 stocks across the globe saw its market capitalization drop from a record high $61.36 trillion on Monday to $60.43 trillion at the close on Thursday.

"What has changed this time is that the scary threats and war of words between the United States 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.

"Most investors will be completely out of their depth in making any assessment on the (North Korea) situation", said Koon Chow, emerging market FX strategist at fund manager UBP.

South Korea's Kospi fell 1.8% to an 11-and-a-half-week low, taking its losses this week to 3.2%.

The last time the S&P closed down more than 1 percent was May 17 when it fell 1.8 percent. Hong Kong's Hang Seng dipped 1.6 percent to 27,314.74.

Stocks are lower at midday as investors weighed the growing tensions between the US and North Korea.

"While the U.S. president insists on ramping up the war of words, there is a decreasing chance of any diplomatic solution", Carnell said.

More news: U removes Sharad Yadav as leader of party in Rajya Sabha
More news: Local Korean War vets concerned about escalating US-NK tensions
More news: Facebook Attempts to Enter China Unnoticed

The franc wasn't the only beneficiary to the risk-off sentiment sweeping markets. These have ranged from an investigation into Russia's possible interference in the 2016 U.S. presidential election, to concern about China's risky debt levels, to stubbornly low inflation in the US. "But looking ahead, unless we start to see a conflict breakout or a major stock market correction, (gold) is capped at $1,295, (although) the upside at the moment is the favoured direction". The index closed at its highest level since November 8, when Trump was elected president. A gauge of volatility on the S&P 500, the VIX hit its highest reading for over a month. But within 20 days, the index was up 0.3 percent and after 250 days, had risen 3.7 percent.

The dollar also slipped 0.26 percent lower against the yen to 110.01 yen. The US currency was down 0.3 per cent at 109.94 yen, following a retreat to 109.740, its weakest since June 15.

The yen tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation and there is an assumption that Japanese investors there will repatriate funds should a crisis materialise.

Gold prices were up almost 1% (http://www.marketwatch.com/story/gold-gains-about-1-as-us-north-korea-tensions-grow-2017-08-09) to $1,273.30 an ounce.

The US dollar set an eight-week low against the yen after US President Donald Trump further ratcheted up the rhetoric, suggesting that his "fire and fury" comments may not have been tough enough.

Markets are now awaiting United States consumer price data for July, due later in the session.

The strength in the sector came amid a jump in the price of gold.

Asian shares were slightly higher on Wednesday, with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS up 0.1 percent in early trading. Crude futures extended losses on the fear of slowing demand and lingering concern over a global oversupply.

Gold prices, which hit a two-month low on Thursday, were steady at $1,286.31 an ounce, after surging over 2 percent in the past two sessions. It is poised to end the week down 1.9%. Global benchmark Brent also lost 0.9% to $51.44, after Thursday's 1.5% drop.

Share