FED WATCH: As well as monitoring the geopolitical backdrop, investors are looking ahead to an appearance Thursday by Bill Dudley, president of the U.S. Federal Reserve Bank of NY, for signs of the Fed's outlook on the economy.
"The data confirms the Fed will have a wait-and-see attitude", said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco.
North Korea said it was considering plans to fire missiles at Guam, a US -held Pacific island, after President Donald Trump on Tuesday warned the nuclear-armed nation that it would face "fire and fury" if it threatened the United States.
"(Safe-haven demand) has settled down to a certain extent, but the market is still expecting more news to come", said Brian Lan, managing director at gold dealer GoldSilver Central in Singapore.
"U.S. markets had previously been becalmed amidst the Goldilocks scenario of strong profit growth, low interest rates and full valuations".
Missile makers Raytheon and Lockheed Martin have outperformed Wall Street by nearly 4 percent in recent days and the Dow Jones U.S. defence index is at a record high and on a seven-day unbroken run of gains.
If North Korea attacks United States , it 'will regret it fast'
The Pacific Command, headquartered in Hawaii, determines if the missile poses a threat to Japan , South Korea, Guam or Hawaii. China, North Korea's only major ally, called on both countries to avoid the "old road" of escalating hostilities.
The pan-European FTSEurofirst 300 index lost 1.19 percent.
The Dow Jones industrial average closed 0.9% lower on Thursday, while the S&P 500 dropped 1.5% and the Nasdaq shed 2.1%. MCX Silver was higher by 0.76% at Rs 38,885 per 1 kg. "Risk aversion is still very much a concern for markets".
Traders said hedge funds had cut leveraged bets against the franc, prompted in part by worries about increased US-North Korea tension.
The Swiss franc and Japanese yen are often sought out in times of geopolitical tension or global financial stress, partly because both countries have big current account surpluses.
The Standard & Poor's 500 index fell 10 points, or 0.4 percent, to 2,463. The market was waiting f or USA consumer inflation data on Friday that would offer more clues about future Fed decisions.
The data comes amid tepid inflation that has remained below the Fed's 2% target, despite low unemployment.
The dollar index, which measures against a basket of currencies, fell 0.05 percent.
Pep Guardiola forecasts end to Manchester City spending spree
Watford incredibly take the No3 spot having not lost a single game, to go with five wins and five draws for 20 points. And the Catalan insists he will stick to his principles ahead of City's opener against Brighton .
Sterling was last trading at $1.3013, up 0.30 percent on the day.
Trump continued to ramp up the rhetoric with a post on Twitter this morning indicating that the U.S.is prepared to take military action against North Korea.
The yield on USA 10-year Treasurys slid to 2.199% Friday from 2.211% Thursday.
The 30-year bond last rose 5/32 in price to yield 2.8107 percent, from 2.818 percent late on Wednesday.
Spot gold rose 0.5 percent to $1,266.20 per ounce at 0054 GMT.
Gold rose 0.6% to $1,268 (£976) an ounce and platinum gained 0.6% to reach $972.95 an ounce, having hit its highest since April at $979. On commodities markets, oil advanced with United States crude nearing $50 a barrel after figures from industry group the American Petroleum Institute showed a sharp decrease in stockpiles, a clear indication of the easing supply glut.
Gold, silver gain on rising tension between US-North Korea
Trump's comments followed reports the North has mastered a technology needed to strike the United States with a nuclear missile. Global stock markets are firmly in the red after another escalation of tensions between North Korea and the United States .
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