* N. Korea signals delay to missile launch plans
* U.S. retail data exceeds expectations
* Empire State business index highest since Sept. 2014
* Dollar, stocks, bond yields rise
* Technical support at $1,261.30
(Updates prices, adds U.S. data) LONDON, Aug 15 (Reuters) - Gold fell sharply for a second day on Tuesday after better-than-expected U.S. economic data and a decrease in tensions over North Korea encouraged investors to buy riskier assets, boosting stocks, the U.S. 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. But fears of conflict eased when North Korean leader Kim Jong Un on Tuesday signaled he would delay a decision on firing missiles towards Guam, a U.S. territory in the Pacific.
"Global tensions seem now to be ratcheting down," Robin Bhar, head of metals research at Societe Generale, said. "Investors are looking to liquidate (positions in gold) and pick up some more risky assets."
Spot gold was down 1.1 percent at $1,268.53 an ounce
at 1320 GMT, taking losses since Friday's high to 1.8 percent.
U.S. gold futures for December delivery were 1.3
percent lower at $1,273.80 an ounce. Gold's fall accelerated after strong U.S. retail sales in July and a high business conditions index suggested strong economic growth. "(This) has resulted in higher bond yields, a U.S. dollar recovery and further downward pressure on gold prices," ABN AMRO analyst Georgette Boele said. A strong dollar is negative for gold prices because it makes dollar-priced gold costlier for holders of other currencies, while higher bond yields raise the opportunity cost of holding non-yielding bullion. Also weighing on gold was the prospect of another increase in U.S. interest rates after an influential Federal Reserve official said he expected one more rise this year. Gold is highly sensitive to rising interest rates because they push bond yields higher and tend to strengthen the dollar. Speculative investors who had in recent weeks built up large bets on higher prices were being forced to reduce their positions, pushing prices lower, Saxo Bank analyst Ole Hansen said. The retreat from Friday's high is the third time this year that gold has failed to reach $1,300, a key technical level. Technical fibonacci supports for gold were at $1,274.70 and $1,261.30, ScotiaMocatta analysts said in a note.
In other precious metals, silver was down 2.6 percent
at $16.59 an ounce, falling below its 100- and 200-day moving averages.
Platinum was down 1.7 percent at $948.75, while palladium was 1.1 percent lower at $885.30 an ounce.
(Additional reporting by Apeksha Nair and Nithin Prasad in Bengaluru; Editing by David Holmes and Jane Merriman)