Gold fell for a second day on Tuesday as North Korean leader Kim Jong Un signalled he would delay a decision on firing missiles towards Guam, encouraging investors to buy riskier assets and boosting stocks, the dollar and bond yields.
Gold, seen as a safe haven in times of uncertainty, rose to a two-month high of $1,291.86 on Friday after a week of escalating military threats between Washington and Pyongyang. "Global tensions seem now to be ratcheting down," said Robin Bhar, head of metals research at Societe Generale.
"Investors are looking to liquidate (positions in gold) and pick up some more risky assets."
The shift to riskier assets is doubly negative for gold because a stronger dollar makes dollar-priced gold costlier for holders of other currencies, while higher bond yields raise the opportunity cost of holding non-yielding bullion.
Spot gold was down 0.75 percent at $1,272.30 per ounce.
U.S. gold futures for December delivery were settled down at $1,279.70 per ounce.