September 22, 2017 / 10:57 AM / 2 years ago

PRECIOUS-Gold up on U.S.-North Korea tensions

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

 (Updates prices)
    By Zandi Shabalala
    LONDON, Sept 22 (Reuters) - Gold recovered from a four-week
low on Friday as investors sought a safe haven from geopolitical
uncertainty caused by rising tensions between North Korea and
the United States. 
    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 vowed to destroy the country, with
leader Kim Jong Un promising to make a "mentally deranged" Trump
pay dearly for his threats.                          
    "Gold took quite a beating after the U.S. Federal Reserve
meeting but now the market got the news about North Korea and
now investors are moving back in gold," Danske Bank analyst Jens
Pedersen said.
    Earlier this week, the Fed signalled it was still on track
to raise interest rates by the end of the year. This weighed on
gold as tighter monetary policy raises the opportunity cost of
holding non-yielding bullion.  
    Spot gold        was up 0.3 percent at $1,294.60 an ounce,
as of 1330 GMT, having hit a four-week low of $1,287.61 in the
previous session. Bullion was down 1.7 percent for the week and
heading for a second weekly decline.
    U.S. gold futures         climbed 0.2 percent to $1,297.50
an ounce.
    The dollar and stocks fell on Friday against the backdrop of
these tensions, while the Japanese yen and Swiss franc gained on
the possibility of North Korea conducting another nuclear test.
    However, the Fed's indication on Wednesday of one more rate
increase by the end of the year could continue to restrain gold,
a trader said. The dollar had risen to a two-month peak
following the Fed's comments.
    Spot gold may end its current weak bounce around a
resistance at $1,299 per ounce and then fall towards a support
at $1,281, said Reuters technicals analyst Wang Tao. 
    "For gold it will continue to be back and forth, one day its
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 flat at $16.94 an ounce, while platinum
       was up 0.6 percent to $929.50.
    Both metals were, however, set for a second weekly decline.
    Palladium        rose 0.4 percent to $915 an ounce and was
set for a third straight weekly loss.

 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
Jason Neely and Mark Potter)
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