US stocks closed lower on Tuesday after Trump's vow to respond aggressively to any North Korean threats triggered a late afternoon selling spree.
If North Korea launches an attack that threatens the US, China should stay neutral, but if the US attacks first and tries to overthrow North Korea's government, China will stop them, a Chinese state-run newspaper has said.
Below that level lies another key support level for the dollar on technical charts at 108.13 yen, a trough the greenback touched in mid-April.
The ongoing political crisis that has seen North Korea state it was seeking to strike the US Pacific island territory of Guam within days, prompted gold speculator Dennis Gartman, editor and publisher of The Gartman Letter to say he believed gold was on the cusp on a significant break out.
The CBOE Volatility Index, better known as the VIX and the most widely followed barometer of expected near-term stock market volatility, rose the most in about 12 weeks.The index ended up 4.93 points at 16.04, the highest level since November 8, when Trump was elected president. The Standard & Poor's 500 index dropped 1.4 percent to 2,438.21. The U.S. currency was down 0.5 percent at 109.73 yen, following a retreat to 109.740, its weakest since June 15.
"There is a low probability that we will have a war with North Korea", he said, and a larger pullback in stocks is "a buyable drop".
The pan-European FTSEurofirst 300 index lost 1.06 percent and MSCI's gauge of stocks across the globe shed 0.17 percent.
The pan-European FTSEurofirst 300 index (.FTEU3) lost 1.11 percent.
Gold got an extra boost after data showed United States 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.
"Risk-off sentiment dominates Asian markets into the end of the week with President Donald Trump's words still sending shockwaves into the markets", said Jingyi Pan, market strategist at online trader IG.
The Swiss franc and Japanese yen are often sought out in times of geopolitical tension or global financial stress, partly because both countries have big current account surpluses.
The dollar index, which tracks the greenback against a basket of six major rivals, was almost flat on the day at 93.646, remaining above last week's 15-month low of 92.548.
Damage for the week: The days of verbal sparring between Washington and Pyongyang looks set to bruise weekly performances for the major USA indexes.
Nordstrom Inc.(JWN) shares rose 1.6% after the retailer late Thursday posted earnings that beat expectations (http://www.marketwatch.com/story/nordstrom-shares-rise-after-retailer-tops-views-sales-rise-2017-08-10), along with a sales rise.
The 30-year bond last /32 in price to yield 2.7933 percent, from 2.794 percent late on Thursday.
"Yuan is expected to remain relatively steady or strong compared to regional peers", Scotiabank said in a note on Thursday.
US crude shed 20 cents to $48.97 a barrel, while Brent crude fell 26 cents to $51.88 a barrel.
Crude oil prices tumbled on the back of the selloff on Wall Street and lingering concerns over global oversupply.
The commodity touched over $1,284.40 an ounce on Wednesday, which marked the highest intraday price in nearly two months.