Gold rebounded from a two-week low on Thursday as North Korea threatened the United States and Japan, and the dollar softened despite strong U.S. consumer inflation data, which could allow further interest rate increases from the Federal Reserve.
A North Korean state agency threatened to use nuclear weapons to "sink" Japan and reduce the United States to "ashes and darkness" for supporting a U.N. Security Council resolution and sanctions over its latest nuclear test.
"These types of comments create a certain bid underneath the market," said Phillip Streible, senior commodities broker for RJO Futures in Chicago. "Dollar weakness is [also] giving it some strength."
Spot gold was up 0.31 percent at $1,326.8199 an ounce by 2:55 p.m. ET, above an earlier low of $1,315.71, its weakest since Aug. 31. U.S. gold futures for December delivery settled up 0.22 percent at $1,330.90.
Also supportive was Chinese bitcoin exchange BTCChina's announcement that it would stop all trading from Sept. 30.
"That's creating an asset allocation shift back into more traditional safety plays in the gold market," Streible said.