September 22, 2017 / 7:02 PM / 2 years ago

PRECIOUS-Gold up as U.S.-North Korea tensions boost safe-haven buying

    * N.Korea says it may test hydrogen bomb in Pacific
    * World stocks, dollar retreat
    * GRAPHIC-2017 asset returns:

 (Updates prices; adds market comment, milestones, byline, NEW
YORK dateline)
    By Chris Prentice and Zandi Shabalala
    NEW YORK/LONDON, Sept 22 (Reuters) - 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
    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. U.S. stocks and
the greenback were down.                    
    Spot gold        was up 0.36 percent at $1,295.71 per ounce 
by 2:29 p.m. 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
    "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
    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
    U.S. 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.

 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
Mark Potter and Chizu Nomiyama)
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