North Korean "saber-rattling" sees gold hit two-month high

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Residents of the USA territory Guam say they're afraid after being caught in the middle of rising tensions between President Donald Trump and North Korea, but Gov. Eddie Calvo reassured his constituents that there is no threat to the island.

The Dow Jones Industrial Average fell 94.55 points, or 0.43%, to 21,954.15, the S&P 500 lost 19.51 points, or 0.79%, to 2,454.51 and the Nasdaq Composite dropped 76.39 points, or 1.2%, to 6,275.94. The Dow also fell 0.5% to dip briefly back below the 22,000 mark, and the Nasdaq tumbled almost 1%.

Just hours after US President Donald Trump told North Korea that any threat to the United States would be met with "fire and fury", a spokesman for the Korean People's Army said in a statement carried by the North's state-run KCNA news agency that it was considering a strike aimed at US military bases on Guam.

In the bond market, treasuries extended the upward move seen in the previous session amid ongoing geopolitical concerns. "Safe-havens are bid and markets are a little uneasy".

Stocks are opening slightly lower on Wall Street after several companies reported disappointing results.

The announcement, made in the name of a general who heads North Korea's rocket command, warned the North is preparing a plan to fire four of its Hwasong-12 missiles over Japan and into waters around the tiny island, which hosts 7,000 USA military personnel on two main bases and has a population of 160,000.

The dollar index, which measures against a basket of currencies, fell 0.05%.

In Europe, France's CAC 40 fell 1.6 percent to 5,135 while Germany's DAX was down 1.3 percent at 12,133.

The dollar weakened after news that United States producer prices unexpectedly fell in July, recording their biggest drop in almost a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase. The FTSE 100 index of leading British shares was 0.7 percent lower at 7,489. Japan's Nikkei 225 Index edged down by 0.1 percent, while Hong Kong's Hang Seng Index tumbled by 1.1 percent.

Oanda analyst Craig Erlam said: "Risk aversion is once again the name of the game.as geopolitical tensions mount and investors head for cover in the traditional safe havens".

Japan is the world's biggest creditor nation and there is an assumption Japanese investors may repatriate their foreign holdings in times of heightened global uncertainty.

The Swiss franc reversed a two-week losing streak, rising rose 1.12 per cent versus the greenback at 0.96 per dollar. The Swiss currency was also on track for its biggest daily gain against the euro since the Swiss National Bank removed its cap on the currency in January 2015.

P meanwhile suffered heavy losses, down 1.4 percent. In 3.14pm trading, the Standard & Poor's 500 Index inched 0.06 percent lower.

The dollar also slipped 0.26 percent lower against the yen to 110.01 yen.

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