Gold edged up from the previous day's four-week low on Friday as the dollar fell and investors sought a safe haven from geopolitical uncertainty caused by rising tensions between North Korea and the United States. Bullion is often used as a refuge in times of political or economic turbulence, while assets considered risky such as stocks are dumped.
North Korea said on Friday it might test a hydrogen bomb in the Pacific Ocean after Trump threatened to destroy the country, with leader Kim Jong Un promising to make a "mentally deranged" Trump pay dearly for his threats. The Japanese yen and Swiss franc gained on the possibility of North Korea conducting another nuclear test. US stocks and the greenback were down.
Spot gold was up 0.36 percent at $1,295.71 per ounce by 2:29 pm EDT (1829 GMT), having hit a four-week low of $1,287.61 on Thursday. Prices hovered near support at the 50-day moving average. Even with the day's gains, spot gold was poised to finish the week down 1.5 percent, the largest such decline since early July. "Gold disappointed today with just a perfunctory bounce as yields and the dollar receded from highs, but largely neglected North Korean threats of a hydrogen bomb test over the Pacific Ocean," said Tai Wong, head of base and precious metals trading at BMO Capital Markets in New York.
"With the speculative market quite long and bullion trading just above key technical support levels fresh buyers were scant." The Fed earlier this week signalled it was still on track to raise interest rates by year-end. Tighter monetary policy raises the opportunity cost of holding non-yielding bullion. The dollar had risen to a two-month peak following the Fed's comments.
US gold futures for December delivery settled up $2.70, or 0.21 percent, at $1,297.50 per ounce. Gold may end its current weak bounce around a resistance at $1,299 per ounce and then fall towards support at $1,281, said Reuters technicals analyst Wang Tao. "For gold it will continue to be back and forth, one day it's about Fed tightening and balance sheet reduction and the next it's about the geopolitical uncertainty that creates this tug of war," Danske Bank's Pedersen said. Silver was unchanged at $16.95 an ounce, as platinum fell 0.86 percent to $927.50. Both metals were set for a second weekly decline. Palladium was up 1.08 pct at $920.33, but still set for a third straight weekly loss.
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