etvfutures.com
etvfutures.com August 20, 2017


Gold buoyed by North Korea tensions, United States inflation data

12 August 2017, 11:44 | Cesar Cruz

Financial markets rattled by sharp increase in tensions over North Korea

Traders work on the floor of the New York Stock Exchange

Spot gold added 0.7 percent to $1,285.70 an ounce.

In Asia, the Japanese Nikkei 225 index closed down 0.1% on Friday.

Disappointing economic data releases weighed on both sides of the Atlantic today with a negative goods trade balance for the United Kingdom (-0.1% versus expectations of 1.4%), higher unemployment claims from the USA (244,000) and also a negative month-on-month PPI figure for the U.S. (-0.1%).

It's the latest warning since he said earlier this week that North Korea faces "retaliation with fire and fury unlike any the world has seen before". On Wall Street, the future for the Standard & Poor's 500 index fell 0.4 percent and that for the Dow Jones industrial average lost 0.1 percent.

U.S. President Donald Trump issued a new threat to North Korea, saying American weapons were "locked and loaded" as Pyongyang accused him of driving the Korean Peninsula to the brink of nuclear war.

Korea said it is examining an operational plan for firing a ballistic missile towards Guam.

The technology sector .SPLRCT was the S&P's biggest drag with a 2.2 percent drop.

"The market hates uncertainty and that's certainly what we have now", said Ole Hansen, head of commodity strategy at Saxo Bank.

ANALYST TAKE: "We're seeing significant risk aversion in the markets on Wednesday, with the escalation in tensions between the USA and North Korea triggering moves into safe haven assets", said Craig Erlam, senior market analyst at OANDA.

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The Nasdaq Composite was up 19.35 points, or 0.31%, at 6 236.22.

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 war of words between the leaders of the US and North Korea continues to dominate investor sentiment", said Forex.com technical analyst Fawad Razaqzada.

The bigger surprise is that the cost to protect against declines in the kiwi against the USA dollar for one month shot up to the most expensive levels since April.

"Of course, this could end up being a flash in the pan, so we don't think that fund managers and traders are going to rush into changing their portfolio allocations just yet, they will want to see how things play out in the coming days".

CURRENCIES: The euro was down 0.1 percent at $1.175 while the dollar fell 0.6 percent to 109.68 yen. South Korea's Kospi also suffered a loss, giving back 0.4%. "What's happened in North Korea is enough to do that".

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

USA crude (CLc1) was unchanged at $48.59 per barrel and Brent (LCOc1) was last at $51.84, down 1.63 percent on the day.



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