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By Maytaal Angel
LONDON (Reuters) - Gold rose on Wednesday after North Korea said it is considering an attack on the U.S. Pacific territory of Guam just hours after President Donald Trump warned Pyongyang that any threat to the U.S. would be met with "fire and fury".
The tensions rattled through global markets, sending investors out of equities and into the safety of the yen, Swiss franc, and government debt. The VIX "fear gauge" of expected volatility on the S&P 500 hit a near month high on Tuesday.
"The market hates uncertainty and that's certainly what we have now," said Ole Hansen, head of commodity strategy at Saxo Bank.
"But looking ahead unless we start to see a conflict breakout or a major stock market correction, (gold) is capped at 1,295 (although) the upside at moment is the favoured direction."
Spot gold rose 0.6 percent to $1,267.79 per ounce at 1004 GMT, while U.S. gold futures for December delivery rose 0.9 percent to $1,273.50 per ounce.
Gold hit a two-week low on Tuesday after U.S. jobs data came in better than expected and the dollar turned positive, while investors awaited U.S. inflation figures later this week for further clues about the pace of interest rate rises.
A strong dollar makes dollar-priced gold costlier for non-U.S. investors while rising interest rates increase the opportunity cost of holding non-yielding bullion.
"We've had some competing forces play out over the past 12 hours -- the U.S. dollar was stronger off economic data, but that was quickly reversed with President Trump's comments about North Korea," ANZ analyst Daniel Hynes said.
"I think (the North Korea situation) is going to continue to provide a little bit of support, but not enough to push prices significantly higher from here," he added.
Switzerland's franc, a traditional safe haven, surged 0.6 percent against the dollar on Wednesday, prompted in part by worries about increased U.S.-North Korea tension.
Platinum gained 0.4 percent to $974 per ounce after hitting its highest since April on Tuesday.
"The upswing (in platinum) came to an abrupt end yesterday when the South African rand depreciated considerably because South Africa's President Zuma once again survived a vote of no confidence in parliament," said Commerzbank.
Silver rose 1.2 percent to $16.70 per ounce, while palladium fell 0.6 percent to $891.40.
(Reporting by Maytaal Angel Additional reporting by Nithin Prasad in Bengaluru Editing by Jeremy Gaunt.)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)