Germany's DAX dropped 0.3 percent to 12,117.07 and the CAC 40 of France lost 0.3 percent to 5,132.22.
"As a portfolio manager, you say, 'Do I think we'll get a war out of this?'", said Torsten Slok, chief global economist at Deutsche Bank. "But we're in a low inflationary environment, which can help valuations remain elevated for longer than they would otherwise".
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose $3.40, or 0.26%, to $1,293.37 a troy ounce.
NORTH KOREA: President Donald Trump warned North Korea of "fire and fury" this week in response to recent threats from Pyongyang, which said it was examining plans for attacking Guam, a USA territory in the Pacific with a military base.
For the week, the Dow is on track to fall 0.9%, its biggest one-week drop since April.
Sterling was last trading at US$1.3007, up 0.25 per cent on the day.
Stocks saw some strength during trading on Friday, regaining ground following the sell-off seen in the previous session. Both the Nasdaq and the Russell are set for their third straight weekly decline.
European equity markets continued to lose ground on Thursday which provided further net support to gold, especially with bond yields tending to drift lower.
The headlines about North Korea served as a spark to jolt investors out of complacency on the heels of an extended period of calm in the market, said McClellan who shared the following chart in a report.
Later on Friday, investors will look to U.S. July consumer price data for hints on the Federal Reserve's policy outlook and near-term moves in the dollar.
Losses at the Snapchat parent ballooned to $443 million in the second quarter, a almost fourfold increase from the same period a year ago. Some say expectations for its server-chip business were just too high (http://www.marketwatch.com/story/nvidia-stock-could-pause-as-server-growth-slows-down-2017-08-10). Over the next three months, the average gain has been good but not great - +1.15%. Indeed, US equities sold off at the open and added to those losses this afternoon following President Trump's latest warning to North Korea.
An editorial in China's state-run Global Times (http://www.globaltimes.cn/content/1060791.shtml), published late Thursday local time, added to the pressure on Asian markets.
So far it's just been a war of words between the USA and North Korea so the rally has just been a normal reaction to the possibility of a geopolitical event.
Cracks are showing in what has been a virtually non-stop USA equity rally after a rapid escalation of tension between North Korea and the United States this week.
The Labor Department said on Friday the Consumer Price Index (CPI) edged up 0.1% last month after being unchanged in June. The news drove investors out of risky assets and into safe-haven assets like gold, U.S. Treasurys and the Japanese Yen.