Gold inched lower on Friday as mild profit-taking set in after recent rallies and as investors awaited US jobs data for direction on interest rates, but safe-haven demand kept the prices near 9-1/2 month highs as tensions over North Korea lingered.

Spot gold slipped 0.2 per cent to $1,319.50 per ounce as of 0338 GMT, not far from the more-than-nine-month high of 1,325.94 hit on Tuesday, and was on track for a weekly gain of more than 2 per cent. US gold futures were up 0.2 per cent to $1,325.20 per ounce.

“We have a bit of profit-taking coming in, especially with the recent rallies to around the $1,325 an ounce levels,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Asian equities followed Wall Street's gains overnight and edged higher on Friday while the dollar's advance slowed ahead of the US jobs report.

Non-farm payrolls data

The non-farm payrolls report comes ahead of the US Federal Reserve's next policy meeting and may influence the timing of the Fed's rate hike.

Gold is highly exposed to interest rates, particularly in the US, as higher rates lift the opportunity cost of holding non-yielding assets and boost the dollar, in which gold is priced.

“While the upside of gold could be around $1,350 per ounce, should the dollar go up, if the jobs data turns out to be positive, the downside will be limited at the $1,300 level, given all the uncertainties, including North Korea, that are still around,” said Leung.

"Investors will also be closely watching the developments in terms of tensions between the US and Russia.”

South Korean and Japanese jets joined exercises with two supersonic U.S. B-1B bombers above and near the Korean peninsula on Thursday, two days after North Korea sharply raised tension by firing a missile over Japan.

Meanwhile, the United States has told Russia to close its consulate in San Francisco and buildings in Washington and New York that house trade missions in retaliation for Moscow cutting the US diplomatic presence in Russia.

Geopolitical risks can boost the demand for safe-haven assets such as gold, considered a good store of value during volatility in other markets.

“With gold prices roaring back, we think the breakout pattern now evident on the charts will likely gain further traction, drawing more quant-based funds in,” INTL FCStone analyst Edward Meir said in a note.

Silver eased 0.2 per cent to $17.53 per ounce. Platinum dipped by 0.3 per cent to $992.00 per ounce, while palladium edged up 0.2 per cent to $934.97

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