Economy

Gold Prices Rise amid Tensions between Washington and Pyongyang

Gold Prices Rise amid Tensions between Washington and Pyongyang”

NEW YORK, Sept 25 (Reuters) - Stocks on Wall Street added to earlier losses while USA government bond yields dropped after North Korea accused the United States of having declared war on the isolated country, while the euro fell after German elections showed support for Chancellor Angela Merkel's party fell to its lowest since 1949.

"The whole world should clearly remember it was the United States who first declared war on our country".

The pan-European FTSEurofirst 300 index rose 0.23 percent and MSCI's gauge of stocks across the globe shed 0.54 percent.

The White House spokeswoman said at a press briefing that the United States had not declared war on North Korea and to suggest that is "absurd".

On currency markets the dollar struggled to recover from its NY losses and was sitting around 111.60 yen, well off the levels around 112.50 yen seen in Tokyo earlier Monday.

The most active gold contract for December delivery rose 14 dollars, or 1.08 percent, to settle at 1311.50 dollars per ounce. The dollar index was up 0.2 percent at 92.32 against a basket of currencies.

And while German Chancellor Angela Merkel won a fourth term as leader of Europe's biggest economy, her falling share of the vote and need to build a coalition government have left investors uneasy.

The pound was up against the dollar and euro in early trade but fell against the greenback to stand at 1.3492 by late afternoon.

However, energy firms were mostly higher as oil prices surged Monday after Turkish President Recep Tayyip Erdogan threatened to block the key crude exports from Iraq's Kurdish region, which is holding an independence referendum.

The tensions that erupted around the Korean Peninsula have boosted demand for safe-haven assets like gold, market analysts said. He said Pyongyang reserves the right to take countermeasures.

Benchmark 10-year notes last rose 12/32 in price to yield 2.2216 percent, from 2.262 percent late on Friday.

Analysts said a rise in oil to a 26-month high, which bolsters inflation, and an upcoming sale of two-year German debt should also keep upward pressure on yields.

The spot gold in the USA was almost unchanged at $1,310.61 per ounce at 0339 GMT, marking its biggest intra-day percentage gain since September 7.

The gold futures were given additional support as the U.S. Dow Jones Industrial Average fell 70.87 points, or 0.32 percent, to 22,287.72 as of 1832 GMT. Palladium was down 0.61 percent at $910.90 an ounce.



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