Stock markets took the brunt of risk-averse trading on Wednesday after an overnight escalation of tensions between the United States and North Korea forced investors into haven assets such as gold, Treasuries and the Swiss franc.
The Dow Jones Industrial Average fell 63.37 points, or 0.29 per cent, to 22,021.97. Gold rose 1.2%, while the Swiss franc was on track to post its biggest single day increase against the euro in about two-and-a-half years.
MSCI's main index of Asia-Pacific shares, excluding Japan, was last down 0.6 percent.
Most Asian currencies stumbled, with the Korean won on pace for its biggest fall in almost eight weeks as North Korea warned it is "carefully examining" plans for a missile strike on the U.S. Pacific territory of Guam. Its stable political and economic policies have long marked yen assets out as havens during times of geopolitical tensions and market turbulence. Meanwhile, the dollar USDJPY, -0.31% fetched ¥109.69, compared with ¥110.31 late Tuesday. The franc jumped 1.4 percent to 0.9611 francs per euro in early trades.
He said: "While the two monetary metals continue to trade mostly on real yield dynamics, some investors reacted to the escalating tension by buying these traditional safe-haven instruments".
In another sign of the risk-averse mood, investors moved money into government bonds.
Sterling was little changed against the greenback at close to a 2-1/2-week low, having lost around 2 percent since the Bank of England last week voted 6-2 to keep interest rates on hold at their record lows. Meanwhile, the country's KOSPI Composite Index SEU, -1.10% fell 1.1% to 2,368.39.
"But looking ahead unless we start to see a conflict break out or a major stock market correction, (gold) is capped at 1,295 (although) the upside at moment is the favored direction".
"The market hates uncertainty and that's certainly what we have now", said Ole Hansen, head of commodity strategy at Saxo Bank.
"The unpredictable nature of North Korea means it is hard to gauge exactly how likely an attack is, yet given the military power of both nations, there is no surprise we are seeing markets shift out of risk assets and into havens such as the yen and gold", said IG market analyst Joshua Mahony, in a note. Brent, the global benchmark, was last down 25 cents a barrel at $51.89.