Fearing nuclear winter, investors bought Swiss francs

Paterniano Del Favero
Agosto 12, 2017

This put the market within striking distance of its June 6 main top at $1305.50.

Japan said on Tuesday it was possible that North Korea had already developed nuclear warheads and warned of an acute threat posed by its weapons programs as Pyongyang's continues missile and nuclear tests in defiance of United Nations sanctions.

Nervous traders have scrambled to take refuge in traditional safe havens such as gold, silver, bonds, Japanese yen and Swiss franc, dampening interest in risk assets such as equities and industrial commodities.

Gold prices held early gains in Asia on Thursday with the market alert for more of the war of words between North Korea and Washington stoking geopolitical tension in the region.

Investors' focus was beginning to return to the U.S. economy after Chicago Federal Reserve president Charles Evans said Wednesday it would be "reasonable" to announce the beginning of a reduction of the Fed's balance sheet next month, while cautioning disappointing inflation data may delay interest rate increases.

Palladium climbed 0.2 percent to $898.30 per ounce and was on track to end the week 2.4-percent higher.

Nvidia's quarterly revenue in its data center and automotive businesses missed estimates, dragging the chipmaker's shares down 3.90%.

Weekly Unemployment Claims rose unexpectedly by 224K.

USA producer prices Thursday disappointed, as traders await consumer price inflation figures later Friday.

On Thursday, New York Fed President William Dudley said he expects sluggish U.S. inflation to rise over the next several months while the hot labor market gets even hotter. It was up about 2 percent for the week so far.

Spot gold was almost flat at $1,285.76 per ounce at 0447 GMT and was set for a weekly gain of over 2 percent. "So we're not going to get to a year-over-year number of 2-percent until some of these very low readings drop out of the statistics 6 to 10 months from now".

The escalating threat from North Korea and President Donald Trump's increasingly aggressive response kept global markets in fear this week. Anymore threats from either side is likely to drive up gold prices. Both precious metals are popular risk-off trades, with investors turning to them in times of uncertainty. This could cause a price surge into the close.

Investor focus now turns to Friday's US consumer price index data. That lifted the year-on-year increase in the CPI to 1.7% from 1.6% in June. Prices actually downticked in July for the first time in nearly a year. Reuters data show a 28-percent chance for a hike after the Fed's December meeting. Other companies were also up; Newcrest Mining moved 2.3%, Resolute Mining 2.1% and Evolution Mining rose 2%.

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