Published: Sat, August 12, 2017
Medicine | By Megan Pierce

Gold Prices Hit 2-Month Highs, Defensive Demand Continues

Gold Prices Hit 2-Month Highs, Defensive Demand Continues

The 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 Washington.

In other corporate results, a number of companies reported forecast-beating numbers.

And with that, the S&P 500's steak of 58 days without a 1% move in either direction came to an end.

"There's not a great incentive to buy big", said Lerner of SunTrust Advisory.

The Nasdaq Composite Index climbed 39.68 points, or 0.6%, to close at 6,256.56.

On the currency markets, the pound was marginally higher against the USA dollar at 1.30 and up 0.1% versus the euro at 1.11.

Emerging market stocks .MSCIEF lost 1.27 percent. Japan was closed on a public holiday. Hong Kong's Hang Seng Index plunged by 2%, while South Korea's Kospi Index slumped by 1.7%.

"Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay.

The S&P 500 index had its biggest one-day drop in nearly three months on Thursday as investors fled riskier assets, with technology stocks leading the charge, in response to an increasingly aggressive exchange of threats between the United States and North Korea.

Equity markets had traded with a soft tone in Europe and there was a sharp increase in selling pressure in NY with the S&P 500 index declining by close to 1.0%.

The precious metal is often seen as a safe haven for investors during times of uncertainty.

Later in the session dollar traders will be busy monitoring producer prices in the U.S., ahead of the key inflation figure tomorrow.

The data comes amid tepid inflation that has remained below the Fed's 2% target, despite low unemployment.

The euro was down 0.4 percent at just over $1.17 and nearing a two-week low, while the New Zealand dollar tumbled a full 1 percent as its central bank head bluntly said he wanted it lower.

The Korean won also continued to skid, sliding 0.4 percent to 1,146.2, below its 200-day moving average.

Gold is sensitive to moves in US rates, which lift the opportunity cost of holding non-yielding assets such as bullion.

The greenback also came under pressure after New York Federal Reserve President William Dudley cautioned it would "take some time" for United States inflation to reach the bank's two percent target, the latest warning price pressures remain muted. That is significant because yields fall when bond prices rise.

The market's main backstop in times of strain, gold, hit a two-month high of $1,282 an ounce amid the nervousness.

Wall Street's so-called "fear gauge", the CBOE Volatility Index, eased after hitting its highest levels since Election Day on Friday (http://www.marketwatch.com/story/wall-streets-fear-gauge-on-course-for-biggest-weekly-surge-in-2-years-2017-08-11).

Markets remained concerned over the risk of a United States first-strike against North Korean nuclear facilities. Brent crude, used to price global oils, added 59 cents to $53.29.

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