Gold prices crept higher on Wednesday amid a weaker dollar, while North Korea's latest missile test had little impact on the safe-haven metal.
“Gold prices haven't seen any surge and the knee-jerk reaction to the initial news was very limited,” said Naeem Aslam, London-based chief market analyst at Think Markets.
“The reason behind this was mainly that we have not seen any strong reaction from the US despite North Korea's regime saying that they have completed their nuclear programme.”
Spot gold was up 0.2 per cent at $1,295.92 an ounce at 0808 GMT. US gold futures were up 0.1 percent at $1,295.50. The dollar index, which measures the greenback against a basket of six major currencies, was down 0.2 per cent.
“Gold has not rallied at all after North Korea's latest missile test ... It further reinforces that the risk-off safe-haven premiums associated with gold are gone for now,” said Jeffrey Halley, senior market analyst with OANDA.
“This leaves it entirely at the mercy of US yields and the dollar index.”
North Korea missile test
North Korea said on Wednesday it tested a new type of intercontinental ballistic missile (ICBM) that could reach all of the US mainland.
President Donald Trump said the United States “will take care of” the North Korea issue and that the basic US approach to dealing with Pyongyang will not change.
Geopolitical risks can boost the demand for safe-haven assets such as gold, considered a good store of value during volatility in other markets.
The metal traded in a narrow range on Wednesday despite a raft of economic news out of the United States, including progress on tax cuts and Fed chair nominee Jerome Powell's confirmation hearing.
“Investors are in a wait-and-see mode and happy with the $1,270-$1,300 range. People expect a rate hike in December and are waiting to see the nature of the U.S. tax reforms bill and details fleshed out,” said John Sharma, an economist with National Australia Bank.
The US Senate Republicans had rammed forward Trump's tax cut bill on Tuesday in an abrupt, partisan committee vote that set up a full vote by the Senate as soon as Thursday, although some details of the measure remained unsettled.
In other metals, palladium dipped 0.3 per cent to $1,024.74 an ounce, but stayed close to Tuesday's peak of $1,028.70, its highest since February 2001.
“We expect global palladium prices to remain supported in the coming years due to the metal's use in gasoline and hybrid vehicles,” BMI Research said in a note.
Silver recovered slightly from the four-week low hit in the previous session and was up 0.4 per cent at $16.89 per ounce. Platinum gained 0.3 per cent to $951.60 an ounce.