Gold rises and Korean won falls
The growing tensions between North Korea and the United States are continuing to weigh on the financial markets today.
The gold price has hit a two-month high this morning, at $1,280.5 per ounce, as investors remain jittery following Donald Trump’s ‘fire and fury’ threat earlier this week.
Overnight, North Korea raised the stakes further by outlining a plan to fire a missile into the water near Guam, the US territory in the Pacific.
General Kim Rak Gyom, the head of the country’s strategic forces, declared that Trump was “bereft of reason”, in a statement that could rile the US president.
My colleague Julian Borger reports:
The response from Pyongyang was its most public and detailed threat to date, and evidently meant to goad the US president.
Trump had “let out a load of nonsense about ‘fire and fury’ failing to grasp the ongoing grave situation. This is extremely getting on the nerves of the infuriated Hwasong artillerymen of the KPA.”
This is causing understandable concern over the border in South Korea.
South Korea’s Kospi stock market index has fallen by 0.4% today, adding to the 1% wiped off shares on Wednesday.
The South Korean Won is also suffering, falling by 0.8% to a four-week low against the US dollar.
Although the City isn’t panicking, it is certainly watching the situation closely.
Konstantinos Anthis of ADS Securities says investors are either sitting on the side-lines or looking to sell risky assets and buy safer ones.
The escalation of the rhetoric between the US and North Korea is keeping market participants on their toes and with no fresh economic reports the price action is dictated by the headlines.