PRECIOUS-Gold rebounds above 2-month low on North Korean concerns

    * North Korea to test long-range missile -Russian report
    * Gold eyes longest run of weekly declines this year
    * GRAPHIC-2017 asset returns:

 (Recasts, updates prices, adds comment)
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, Oct 6 (Reuters) - Gold bounced up from a
two-month low on Friday, on concerns stoked by a Russian report
that North Korea is preparing to test a long-range missile and
on support from the U.S. dollar's shift into negative territory.
    "The Russian report of a looming North Korean missile test
that could reach the west coast of the United States combined
with a weakening dollar goosed gold from two-month lows," said
Tai Wong, head of base and precious metals trading at BMO
Capital Markets in New York.
    "Gold has slumped 7 percent over the past month, which is
making speculative shorts wary at current levels so we may see
$1,300 before $1,250." 
    Spot gold        rose 0.4 percent at $1,273.06 an ounce by
2:40 p.m. EDT (1840 GMT). U.S. December gold futures       
settled up 0.1 percent at $1,274.90.
    The dollar index        fell from a 2-1/2-month high.      
    "The dollar's initial gains evaporated as market
participants made a more sober assessment of the jobs report and
realized that the sharp rise in average hourly earnings may have
been driven by a sizeable drop in low-paid and hurricane-hit
jobs rather than an actual rise in earnings," said Fawad
Razaqzada, technical analyst for 
    "As the dollar fell, buck-denominated precious metals went
up in value."
    Earlier, bullion fell to a two-month low at $1,260.16 an
ounce on an upbeat reading of the U.S. unemployment rate and
wage growth last month that supported expectations for a further
U.S. interest rate hike in December. This pushed the dollar and
Treasury yields higher.                    
    Gold prices have fallen 0.5 percent this week and are facing
their fourth straight week of decline, the metal's longest run
of weekly losses this year.
    Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Shares      , have fallen 13.6 tonnes so far
this week, their first weekly outflow in nine weeks and the
largest since late July.           
    Demand for physical gold in India improved slightly this
week because of a correction in local prices, but restrictions
on the industry and increased smuggling took the sheen off the
bullion market.         
    Silver        was up 1.1 percent at $16.75 an ounce, after
falling to a two-month low at $16.30. Platinum        was down
0.03 percent at $910.75 an ounce, after falling to the lowest
since July 12 at $899.50.
    Palladium        was down 2 percent at $920.25 an ounce,
maintaining its premium over platinum, which it moved into last
week for the first time since 2001. The spread between the two
reached more than $34 an ounce earlier on Friday.

 (Reporting by Marcy Nicholson and Jan Harvey Additional
reporting by Apeksha Nair and Arpan Varghese in Bengaluru;
Editing by Dale Hudson/Jeremy Gaunt)