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Gold erases losses after Trump's comments on North Korea

  • "North Korea best not make any more threats to the United States," Trump told reporters.
  • Gold futures for December delivery erased losses in after-hours trade, climbing 0.1 percent to 1,265.90 per ounce.
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AP

Gold prices turned higher on Tuesday after U.S. President Donald Trump issued a stark warning to North Korea.

"North Korea best not make any more threats to the United States," Trump told reporters, speaking slowly and deliberately with his arms crossed in front of him. "They will be met with fire and fury like the world has never seen. He has been very threatening ... and as I said they will be met with fire, fury and frankly power, the likes of which this world has never seen before."

Gold futures for December delivery erased losses in after-hours trade, climbing 0.1 percent to 1,265.90 per ounce. Spot prices rose 0.21 percent to trade at 1,260.01.

The precious metal traded lower earlier after the U.S. dollar turned positive as investors awaited U.S. inflation figures later this week for further clues about the pace of interest rate rises.

"Ahead of the U.S. inflation numbers gold will likely trade sideways until there's more direction," said Fawad Razaqzada, an analyst at FOREX.com.

Inflation is a key economic factor the U.S. central bank considers when deciding monetary policy. A strong U.S. inflation reading could raise expectations for future interest rate increases, which would put pressure on non-yielding bullion.

The dollar index was 0.4 percent higher against a basket of major currencies. A stronger dollar increases the cost for buyers of commodities such as gold who are outside the United States. Investors were also awaiting clues as to when the U.S. Federal Reserve will begin reducing its $4.2 trillion bond portfolio.

"Given the move towards tighter monetary policy ... the developing bullish chart picture may be a warning that investors are buying more gold as an insurance against heightened risk of trouble ahead," ScotiaBank analysts said in a note.

World stocks touched a new high on Tuesday despite weaker than expected Chinese trade data. A higher appetite for riskier assets such as stocks usually saps demand for safe-haven gold.

Meanwhile, holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell to 786.87 tonnes on Monday.

In other precious metals, silver rose 0.95 percent to $16.391 per ounce. In the previous session, it retouched its July 20 low of $16.10 an ounce, the weakest since July 18.

Platinum gained 0.57 percent to $969 per ounce and palladium rose 1.15 percent to $896.15 per ounce.

"Platinum is being supported by strong fundamentals as supply in comparison to the demand is a little weak," said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.