Gold Prices Hit 2-Month Highs, Defensive Demand Continues


The price of gold rose on Thursday for the third straight day, reaching a two - month high as another exchange of threats by the United States and North Korea prompted investors to buy bullion as a safe - haven asset.

But the yen added to an already-strong weekly rally of close to 1.5 percent, hitting its highest in nearly four months versus the dollar at 108.73 yen. The FTSE 100 index of leading British shares was 0.6 percent lower.

Trump took specific aim at North Korean leader Kim Jong Un on Thursday, saying he had "disrespected our country greatly" and would not be "getting away with it".

Many markets have climbed to record or multi-year highs, leaving them vulnerable to a sell-off.

South Korea's KOSPI fell 1.8 percent to a 9 1/2-week low, taking its losses this week to almost 2.7 percent. Monthly, the same figure fell 0.5% coming in well below expectations of a 0.3% gain.

"This situation is beginning to develop into this generation's Cuban Missile crisis moment, with recent leaked intelligence reports alleging that North Korea now has miniaturised its nuclear warheads, which extends the range of its missiles, and potentially brings US targets into reach", ING's chief Asia economist Robert Carnell said in a research note on Friday.

Weekly Unemployment Claims rose unexpectedly by 224K. "Risk aversion is still very much a concern for markets".

The index ended up 4.93 points at 16.04, the highest level since November 8, when Trump was elected president.

Gold Prices Hit 2-Month Highs, Defensive Demand Continues
Gold Prices Hit 2-Month Highs, Defensive Demand Continues

The S&P is trading near its most expensive valuation level since 2004, as measured by the price-to-12-month forward earnings ratio.

The index was also dragged lower after Beijing ordered probes into three major Chinese social networking platforms over outlawed content. Equity screens were also awash with red in Asia as investors fled to safe haven assets after US President Donald Trump doubled down on his North Korea rhetoric. EIA reported that USA crude inventories fell last week as refineries boosted output to the highest percentage of capacity in 12 years.

The dollar extended losses against the yen to hit a new two-month low.

Traders took heart in a measure of US consumer prices that increased only slightly in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

Overall, gold continued to edge higher to the $1,280 per ounce area in European trading.

Markets remained concerned over the risk of a USA first-strike against North Korean nuclear facilities.

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%). "I think before the end of the year the market goes to new highs and (Treasury) yields go higher".

Shares rose more than 1.3% or 4.9p to 388.5p.

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