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Gold edged up on Tuesday, with investors shying away from riskier assets after North Korea fired a missile that landed in Japanese waters, although the metal stayed near a seven-week low hit the day before.
North Korea on Tuesday said it successfully test-launched an intercontinental ballistic missile (ICBM), days before leaders from the Group of 20 nations are due to discuss steps to rein in Pyongyang's weapons programmes.
“The North Korean missile launches are becoming second nature ... but some jitters remain on escalation,” said Stephen Innes, head of trading for Asia Pacific at OANDA in Singapore.
Gold is often used as an alternative investment during times of political and financial uncertainty.
Spot gold had risen 0.4 per cent to $1,224.71 per ounce by 0734 GMT. On Monday, it fell 1.7 per cent in its biggest one-day percentage loss since November, touching its weakest since May 11 at $1,218.31 an ounce. US gold futures for August delivery climbed 0.4 per cent to $1,224.50 an ounce.
The potential for any sort of disagreement on trade, investment, and security between US President Donald Trump and other European leaders at the G20 summit is also providing some geo-political support for gold, said NAB analyst John Sharma.
However, expectations of higher bond yields are weighing on non-yielding bullion keeping it range-bound, Sharma added.
US Treasury yields rose on Monday after US manufacturing data boosted expectations the Federal Reserve would raise interest rates again this year as other central banks shift towards tighter monetary policy.
Asian shares turned lower on Tuesday as earlier gains were quashed by the tensions on the Korean peninsula, while the dollar index against a basket of six major currencies slipped 0.1 per cent to 96.139.
Among other precious metals, silver was down 0.1 per cent at $16.08 an ounce, after touching its lowest since May 9 at $16.01.
“More investors are coming aboard at the current relatively low entry level for silver and physical demand has been robust both in Singapore and in Hong Kong,” said Joshua Rotbart, managing partner, J. Rotbart & Co in Hong Kong.
Platinum rose 0.5 per cent to $906 after falling below $900 for the first time since May 10 on Monday. Palladium advanced 1.2 per cent to $853.72 an ounce. US markets will remain closed on Tuesday for the Independence Day holiday.
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