Gold rebounds above two-month low on North Korean concerns

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 <.dxy> fell from a 2-1/2-month high.[USD/]

"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 Forex.com. 

"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. [FRX/]

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. [GOL/ETF]

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. [GOL/AS]

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.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)