The surge in gold prices come a day after the yellow metal snapped a three-day winning streak, as investors cheered US job openings data that topped expectations suggesting the USA labor market continues to strengthened, raising the prospect of the Federal Reserve hiking rates later this year.
Emerging market stocks lost 1.03 percent. They outweighed gains in health care stocks and elsewhere.
Investors' unease over escalating tensions between the USA and North Korea had weighed on stocks earlier in the day, pushing gold and bond prices slightly higher.
The Russell 2000 index of smaller-company stocks gave up 14 points, or 1 percent, to 1,382.
"Right now the market is viewing it as a lot of saber-rattling and a lot of smoke, but not much fire", said Darrell Cronk, president of Wells Fargo Investment Institute.
Dai-ichi Life Holdings dropped 1.8 percent, T&D Holdings fell 2.4 percent while Mitsubishi UFJ Financial Group declined 1.1 percent.
The Dow closed down 33 points, at 22,085.34. Earlier, the average had been down more than 88 points. The Nasdaq was off 0.2 percent, to 6,370.46. Only utilities sector stocks eked out a gain on a day of mostly listless trading as investors kept an eye on the latest company earnings and geopolitical news. That's the index's lowest level in two months.
Dow Jones Industrial Average (DJIA) futures are trading below fair value, as traders continue to monitor escalating tensions between the US and North Korea.
Sabre-rattling between the two sides continued on Thursday as North Korea outlined detailed plans for a missile strike near the US Pacific territory of Guam before the market opened.
Gold quickly surged back above $1,260 per oz as investors sought safe haven assets, according. But the moves were modest. "I think gold will break $1,300 in this particular rally coming up and I think silver can break $20", he added.
Data showed USA producer prices unexpectedly fell in July, recording their biggest drop in almost a year, while another set showed the number of Americans filing for unemployment benefits unexpectedly rose last week.
While the tough talk about the potential for war is scary, investors have heard it many times before. The slide deepened after Trump's remarks on North Korea aired.
RETAIL SLUMP: Disappointing quarterly results from big department store chains put investors in a selling mood. The stock lost $142.20 to $1,906.80.
Macy's shares closed down 10.2 percent and Kohl's fell nearly 6 percent as the companies continued to report a drop in quarterly same-store sales, stoking concerns that their turnarounds may still be a long way off. Banks and retail chains were also among the big decliners. Discovery Communications fell 70 cents, or 2.9 percent, to $23.60.
Apple may launch a new 4-inch iPhone SE next year
It's frequently expected that Apple will use black bezels across the board to blend them into the phone's 5.8-inch OLED display. Interestingly, though, most rumours and mock-ups point to a vertically mounted array, with one lens above the other.