The all-important July inflation numbers out of the USA failed to satisfy dollar bulls' hopes of strongly putting a Fed rate hike later in the year back on the table.
24k gold in Dubai is priced at Dh153.25, while 22k can be purchased at the rate of Dh144. The Russell 2000 index of smaller-company stocks picked up 1.69 points, or 0.1 percent, to 1,374.23.
The pan-European FTSEurofirst 300 index lost 1.19 percent. Pyongyang said it was examining plans for attacking Guam, a US territory in the Pacific with a military base. "What we're seeing today is political tensions over North Korea and the United States ... making people nervous", said Robert Pavlik, chief market strategist at Boston Private Wealth in NY.
Wall Street stocks posted their biggest declines in almost three months late Thursday as US President Donald Trump doubled down on his warnings to North Korea over its nuclear program.
Trump continued to ramp up the rhetoric with a post on Twitter this morning indicating that the U.S.is prepared to take military action against North Korea.
Spot gold prices were little changed at $1,286.05 an ounce, after touching a two-month high earlier. In a note to investors, Paul Christopher, head global market strategist, and Tracie McMillion, head of global asset allocation, suggest, "the threat of a nuclear weapon is certainly more serious than previous threats, but that threat also may increase the probability of a diplomatic solution".
When Japanese traders get back to their desks Monday, stocks will need to catch up with Friday's regional weakness and the yen's recent gains against the dollar, up 1.5% on the week. The big economic news of the day will come after Asian markets have moved on to the weekend, however, with the release of USA consumer price index inflation data for July.
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.
USA dairy group Dean Foods dropped nearly 21 percent as its quarterly earnings fell, and the stock received a downgrade from JPMorgan.
"I think the market was looking for a reason to come off here", said Irwin Michael, portfolio manager at ABC Funds.
Meanwhile, gold stocks bucked the downtrend, driving the NYSE Arca Gold Bugs Index up by 1.3%.
Back in London Worldpay closed as another gainer in the FTSE 100, up 0.4%, after it agreed to a GBP9.30 billion takeover by United States rival Vantic after weeks of talks, in a deal which is set to create a GBP22.20 billion payments giant.
Oil prices were lifted by a sustained decline in inventories and as Saudi Arabia prepared to cut crude supplies to its prized Asian customers.
However these stocks - along with tech giants Microsoft and Alphabet, Google's parent - have been among the top performers all year.