Gold spirals on brewing tension between US, NK

Persistent gold buying by local jewellers at domestic spot market stoked uptrend

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

Trump's threat earlier this week, to unleash "fire and fury" on Pyongyang if it attacked, was ultimately dismissed as bluster by many investors.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, rose almost 11 percent to break above 12.

Japanese markets were closed for a holiday but the yen powered on, hitting an eight-week high of 108.91 yen to the dollar, adding to its biggest weekly gain since May.

Risk sentiment soured in the financial markets to drive US Treasury yields down and in turn weigh on the dollar. The Russell 2000 index of smaller-company stocks gave up 10 points, or 0.8 percent, to 1,399.

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

J.C. Penney sank 16.6 percent after the struggling department store chain reported quarterly results that fell short of Wall Street's expectations. The dollar index slipped to a one-week low on Friday after the U.S. data.

If North Korea launches an attack that threatens the United States, China should stay neutral, but if the US attacks first and tries to overthrow North Korea's government, China will stop them, a Chinese state-run newspaper said on Friday. Top automaker Hyundai Motor fell 2.07 percent to 142,000 won.

The Swiss franc had also risen more than 1 percent against the euro on Wednesday, recording one of its largest single-day jumps against the euro since the Swiss National Bank removed its cap on the Swiss franc in January 2015.

Shares of United States department stores Kohl's and Macy's were weak after their results.

Seoul shares hit 11-week low amid selling by foreign investors following Trump's fresh warning to North Korea.

BONDS: Bond prices were rose.

The Standard & Poor's 500 index dropped 35.81 points, or 1.5 percent, to 2,438.21.

Nevertheless, traditional safe havens jumped, with the benchmark 10-year USA note yield hitting its lowest level since June 28 and gold futures surging more than 1 percent. The Stoxx Europe 600 fell 1%, while benchmarks in Hong Kong and South Korea - which had been one of the best performers of 2017 - closed down 2% and 1.7% respectively, Friday, putting the week's drop at 2.5% and 3.2%.

The index was also dragged lower after Beijing ordered probes into three major Chinese social networking platforms over outlawed content. For the week, the metal rose 2.3 per cent the strongest weekly gain since the week ended April 13.

In terms of forex market movements, the United States currency lost significant ground relative to majors including the yen, sterling and the euro - most notably the latter one - as the news on inflation went public.

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