A separate report from the Labor Department showed an unexpected uptick in initial jobless claims in the week ended August 5th.
"Much of the rally (in gold) is because of the increased safe-haven demand", said OCBC Bank analyst Barnabas Gan.
All 11 major S&P sectors were lower and the consumer discretionary index was the biggest loser with a 1 percent drop.
The Nasdaq composite slumped 135.46 points, or 2.1 percent, to 6,216.87.
The 30-year bond last rose 5/32 in price to yield 2.8107%, from 2.818% late on Wednesday.
The Standard & Poor's 500 index fell 10 points, or 0.4 percent, to 2,463.
Small-company stocks fell more than the rest of the market Wednesday. "If it's North Korea, I don't think this will be a fruitful period for equity investors", Nick said.
President Donald Trump promised "fire and fury and frankly power, the likes of which this world has never seen before" on Tuesday evening in response to recent threats from North Korea and its leader Kim Jong Un.
Wall Street saw a stock sell-off on Thursday as rising tensions between the USA and North Korea filled investors with worry.
SeaWorld Entertainment slid 6.2% after the theme park operator reported second-quarter revenue that fell short of Wall Street's expectations.
Shares in Worldpay gained 1% in London trading. The stock was the biggest gainer in the S&P 500, adding $8.02 to $45.25.
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Markets are now focused on USA consumer price data for July, due later in the session.
Oil prices rose before a report expected to show USA crude stocks fell for a sixth week.
Oil prices were lifted by a sustained decline in inventories and as Saudi Arabia prepared to cut crude supplies to its prized Asian customers.
In other energy futures trading, wholesale gasoline dipped one cent to 1.62 dollars a gallon. Heating oil fell 1 cent to $1.63 a gallon.
Charter Communications rose 2.9 per cent on news Altice is exploring a bid for the cable giant.
Meanwhile, gold stocks are bucking the downtrend, driving the NYSE Arca Gold Bugs Index up by 1.2%.
The Dow Jones Industrial Average shed 0.2 per cent to close the day at 22,048.70. Retail sales through credit cards in New Zealand disappointed as the July figure grew only 2% annually, down from 4.5% in the prior month.
Politics also lifted USA defense stocks.
The positive data also bolstered the greenback against the euro and the pound Wednesday.
The dollar was down 0.77 percent against the yen at 109.21 yen.
In Asia, markets were mostly lower after disappointing Chinese trade data. Japan's Nikkei 225 slipped 0.3%, while Australia's S&P/ASX 200 lost 0.5%.
Earlier; Japan's benchmark stock index closed down 1.3 percent and South Korea's declined 1.1 percent. Hong Kong's Hang Seng was off 0.3 percent.