Gold up on rising US-North Korea tensions

[BENGALURU] Gold prices rose early Wednesday amid rising tensions between the United States and North Korea after the North responded to warnings from US President Donald Trump with a threat to strike the US territory of Guam.

"We've had some competing forces play out over the past 12 hours - the US dollar was stronger off economic data, but that was quickly reversed with President Trump's comments about North Korea earlier today (Wednesday)," said ANZ analyst Daniel Hynes.

Spot gold rose 0.3 per cent to US$1,264.50 per ounce at 0324 GMT, while US gold futures for December delivery rose 0.6 per cent to US$1,270.40 per ounce.

Pyongyang said on Wednesday it was considering plans for a missile strike on the US Pacific territory of Guam, just hours after Trump said North Korea would face "fire and fury" if it threatens the United States, his strongest warning yet for North.

"I think (the North Korea situation) is going to continue to provide a little bit of support, but not enough to push prices significantly higher from here," said Hynes.

Asian shares and US stock futures slipped while US Treasuries, gold and the safe-haven yen rose in early Asian trading on Wednesday after tensions on the Korean peninsula escalated.

On Tuesday, stronger-than-expected US jobs data from the Labor Department weighed on gold, dragging prices to the lowest since July 26 at US$1,251.01 an ounce.

"The weakness in gold abruptly ended later in the day as stocks turned south after President Trump issued a rather stern warning to the North Koreans," said INTL FCStone analyst, Edward Meir.

Geopolitical risks can boost demand for safe haven assets such as gold.

"We likely will continue to see more tension in the region (Korean Peninsula)," Mr Meir noted.

"This in turn suggests that at least for the balance of this week, we likely should be long gold as the heated rhetoric could raise the odds of military action." Investors are also awaiting US inflation data due later this week for clues on when the US Federal Reserve would begin reducing its US$4.2 trillion bond portfolio.

In other precious metals, silver rose 0.4 per cent to US$16.48 per ounce.

Platinum gained 0.7 per cent to US$973.40 per ounce after hitting its highest since April 21 in the previous session.

Palladium fell 0.2 per cent to US$895.30 per ounce.

REUTERS