TSX closes 143 points lower, gold rises amid US-North Korean tensions

Comex Gold

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.

US stocks were on track for their biggest weekly loss in months, shaken by disappointing earnings results and an escalation of threats between the USA and North Korea.

The Dow Jones industrial average closed up 14 points, a gain of 0.07 percent, the Nasdaq composite rose almost 40 points or 0.64 percent and the S&P 500 gained 3 points or 0.13 percent.

European equity markets continued to lose ground on Thursday which provided further net support to gold, especially with bond yields tending to drift lower.

Shane Oliver, head of investment strategy at AMP Capital in Sydney, said: "What has changed this time is that the scary threats and war of words between the USA and North Korea have intensified to the point that markets can't ignore it".

A Reuters Datastream index of more than 7,000 stocks across the globe saw its market capitalisation drop from a record high US$61.36 trillion on Monday to US$60.43 trillion at the close on Thursday.

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.

CURRENCIES: The dollar slipped to 109.98 yen from 110.06 late Wednesday in Asia.

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%.

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The Canadian dollar was trading at an average price of 78.67 cents United States, down 0.04 of a USA cent. "If you look at the gold price after the CPI (inflation) data, it tells you that the Fed is not going to be in any rush to increase the interest rate this year", said Naeem Aslam, chief market analyst at Think Markets.

All the 11 major S&P indexed were lower, with technology sector's 0.62% leading the decliners.

In bond markets, the yield on US Treasuries fell, also pressured by the lowered expectations for a Fed move.

USA crude fell 0.41 percent to $48.39 per barrel and Brent was last at $51.68, down 0.42 percent on the day.

"There are four more (inflation) prints between now and the December FOMC meeting and we expect the Fed to remain data-dependent, if a touch more cautious", TD Securities said in a research note.

USA crude rose 0.43 percent to $48.80 per barrel and Brent was last at $52.01, up 0.21 percent on the day. EIA reported that United States crude inventories fell last week as refineries boosted output to the highest percentage of capacity in 12 years.

Gold, another classic safe haven asset, was trading at around US$1,285 per ounce, up more than two percent this week and near a nine-week high.

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

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