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Gold dips as investors seek riskier assets amid easing North Korea tensions

[BENGALURU] Gold prices fell in early trade on Tuesday as easing tensions between the United States and North Korea saw investors seek riskier assets like equities.

Spot gold was down 0.5 per cent at US$1,275.79 per ounce, as of 0315 GMT. US gold futures for December delivery shed 0.7 per cent to US$1,281.40 per ounce.

North Korean leader Kim Jong Un received a report from his army on its plans to fire missiles towards Guam and said he will watch the actions of the United States for a while longer before making a decision, the North's official news agency said on Tuesday.

"It's no surprise that gold is trending a little lower this morning. Some risk aversion is taken off the table simply because some concerns of the North Korean attack has eased,"said OCBC analyst Barnabas Gan.

Market voices on:

"Safe haven flows into the yen and gold has fallen a little bit because of improved risk appetite in the market."

Asian shares rallied and the US dollar firmed on Tuesday after North Korea's leader signalled that he would delay plans to fire a missile near Guam, further easing tensions and prompting investors to move back into riskier assets.

Geopolitical risks can boost demand for safe-haven assets such as gold and the Japanese yen.

"It is safe to say that the safe haven demand is badly quelled. The Asian markets are poised to build on this momentum," said Naeem Aslam, chief market analyst at Think Markets.

"Having said that, the latest comments by the US defence secretary has upped the ante somewhat by saying if North Korea fires a missile at United States, it would mean a war. So the latest pull back in the gold price doesn't mean that the bulls are out of energy," Mr Aslam added.

Defence Secretary Jim Mattis warned on Monday that the US military would be prepared to intercept a missile fired by North Korea if it was headed to Guam.

Also weighing on the metal was the prospect of another raise in US interest rates by the Federal Reserve this year, with one influential member, New York Fed President William Dudley backing the same.

Spot gold may fall more to US$1,267 per ounce, as it has broken a support at US$1,278, Reuters technical analyst Wang Tao said.

Among other metals, silver edged down one per cent to US$16.85 per ounce.

Platinum fell 0.5 per cent to US$960.15, after earlier touching its lowest in a week at US$956.90, and palladium dipped 0.1 per cent at US$894.22.