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PRECIOUS-Gold steady around highest in nearly 7 wks on N.Korea tensions

    * Worries over North Korea stoke safe-haven appetite for
gold
    * Spot gold may break resistance at $1,271 per ounce
-technicals
    * Dollar struggles near 2-1/2 year low vs euro

 (Updates prices, details)
    By Nithin ThomasPrasad
    BENGALURU, July 31 (Reuters) - Gold prices on Monday held
around their highest in nearly seven weeks as tensions on the
Korean peninsula boosted safe-haven demand for the metal and as
the U.S. dollar hovered close to multi-month lows.
    The United States flew two supersonic B-1B bombers over the
Korean peninsula in a show of force on Sunday and the U.S.
ambassador to the United Nations said China, Japan and South
Korea needed to do more after Pyongyang's latest missile tests.
            
    "I think (the market) is cautious about the situation in
North Korea and investors tend to go long on gold (at times like
these)," said Yuichi Ikemizu, Tokyo branch manager at ICBC
Standard Bank. "I think gold will stay firm this week."     
    Spot gold        hit its highest since June 14 at $1,270.98
in early trade, but was down 0.1 percent at $1,267.93 per ounce
as of 0656 GMT. It gained about 1.1 percent last week in its
third consecutive weekly gain.
    U.S. gold futures         for August delivery fell 0.1
percent to $1,267.60 per ounce.  
    "Due to the ongoing summer holidays (in Asia), markets are
expected to be thin and quiet," said ICBC Standard Bank's
Ikemizu.
    The dollar struggled on Monday, wallowing near a 2-1/2-year
low against the euro, weighed down by U.S. political uncertainty
and uninspiring U.S. data that added to doubts about whether
there will be another Federal Reserve rate hike this year.
      
    "A weaker U.S. dollar is the main driver of gold's price
action," said Jeffrey Halley, a senior market analyst at OANDA.
    "However, deepening political turmoil in Washington ... and
North Korea's progress on ballistic missiles will all ensure the
uncertainty premium continues to support gold's price."    
    Meanwhile, gold prices in India last week recorded the
biggest discount in seven months as a rebound in prices
curtailed retail demand, while lower premiums in other Asian
centres failed to lure customers amid a seasonal slowdown.
        
    Hedge funds and money managers sharply increased their net
long position in COMEX gold to a four-week high in the week to
July 25, U.S. Commodity Futures Trading Commission (CFTC) data
showed on Friday.             
     Spot gold may break resistance at $1,271 per ounce and rise
towards the next resistance level at $1,277, driven by a strong
wave C, according to Reuters technical analyst Wang Tao.
    In other precious metals, silver prices        gained 0.3
percent to $16.71 per ounce. The metal rose 1.2 percent last
week, in its third straight weekly gain. 
    Platinum        climbed 0.7 percent to $935.25 per ounce,
after falling about 0.5 percent last week. Palladium       
advanced 1.1 percent to $886.72 per ounce, having gained 3.8
percent the previous week.   

 (Reporting by Nithin Prasad in Bengaluru; Editing by Joseph
Radford and Subhranshu Sahu)
  
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