· Gold rebounded from a two-week low on Thursday as North Korea threatened the United States and Japan, and the dollar softened despite strong U.S. consumer inflation data, which could allow further interest rate increases from the Federal Reserve.
· Spot gold was up 0.4 percent at $1,328.33 an ounce by 2:03 p.m. EDT (1803 GMT), above an earlier low of $1,315.71, its weakest since Aug. 31.
U.S. gold futures for December delivery settled up 0.1 percent at $1,329.30.
· A North Korean state agency threatened to use nuclear weapons to "sink" Japan and reduce the United States to "ashes and darkness" for supporting a U.N. Security Council resolution and sanctions over its latest nuclear test.
· The latest report said North Korea fired a missile on Friday that flew over Japan’s northern Hokkaido far out into the Pacific Ocean, South Korean and Japanese officials said, further ratcheting up tensions after Pyongyang’s recent test of a powerful nuclear bomb.
· Also supportive was Chinese bitcoin exchange BTCChina's announcement that it would stop all trading from Sept. 30.
"That's creating an asset allocation shift back into more traditional safety plays in the gold market," said Phillip Streible, senior commodities broker for RJO Futures in Chicago.
· Firming inflation could support the case for another rate increase and send the U.S. currency significantly higher, analysts said.
"We still expect the Fed to hike rates in December, which the market doesn't," Julius Baer analyst Carsten Menke said.
· Although in the longer run a more inflationary environment could support gold demand, both a stronger dollar and higher rates would probably weigh on the metal in the near term.
· Silver was up 0.01 percent at $17.73 an ounce, while platinum was up 0.5 percent at $981.80 an ounce, after falling to the lowest since Aug. 28 at $971.50.
· Spot palladium was 1.4 percent lower at $923.48, after falling to the lowest since Aug. 18 at $914.
Reference: Reuters
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