Johannesburg/London - Gold prices climbed to two-month highs on Friday as investors sought refuge from escalating tensions between North Korea and the U.S., while bullion also received support from weak USA inflation data.
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.
The U.S. dollar inched up against the Japanese yen and the Swiss Franc on Friday, erasing earlier losses, after Russian Foreign Minster Sergei Lavrov said there was a Russian-Chinese plan to defuse tensions between the United States and North Korea.
"We're not very oversold yet so the market still has more downside left to it".
Heightened tensions between North Korea and the U.S. are negative factors in the local stock markets that could drag down the index, Cape Investment & Securities said in a report.
"We're still close to the all-time high so that makes people a little nervous too, so they might say now might be the time to take a little bit of money off the table".
The local currency closed at 1,143.50 won against the US dollar, down 1.50 won from the previous session's close.
The pan-European FTSEurofirst 300 index lost 1.11 percent. The Korean won fell against the US dollar.
Analysts warned the softening dollar could test June's low of 108.82 yen and even the 2017 trough of 108.13 yen.
"The yen is the big story really".
"Traders should closely watch global equities today, with further falls and risk aversion likely pumping more safe-haven flows into precious metals", said Jeffrey Halley, a senior market analyst at OANDA.
The market also awaited US consumer inflation data on Friday that would offer more clues about the pace of the US Federal Reserve's monetary tightening. -North Korea tensions and the weak data that further reduced expectations of a Fed rate hike in December.
Cape Investment & Securities said it expected the benchmark Korea Composite Stock Price Index to trade at the 2,300-2,360 range next week.
Bond prices, which move inversely to yields, closed higher.
Crude oil prices tumbled on the back of the selloff on Wall Street and lingering concerns over global oversupply.
The euro eased 0.1 percent to $1.1766, staying below a high of around $1.1910 set last week, the euro's strongest level in 2-1/2 years.
"Gold and silver are higher, thanks mainly to their status as safe-haven commodities".