BENGALURU - Gold rose on Wednesday as safe-haven demand was buoyed by expectations that geopolitical tensions could persist, although further gains were capped as the dollar recovered slightly amid perception of a brief lull in tensions surrounding North Korea.
"A lot of people are still seeing gold as a safe haven because we have not heard much in terms of reactions of the different countries to North Korea's action," said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
Spot gold rose 0.3 percent to $1,313.10 per ounce at 0403 GMT, but was off a more than nine-month peak hit on Tuesday at $1325.94.
U.S. gold futures were little changed at $1,318.30 per ounce.
"Do we think that the geopolitical issue will intensify? No, we don't, but we cannot rule it out either," said Dominic Schnider at UBS Wealth Management in Hong Kong.
"Looking at how things are spiralling, the risk is that these tensions linger on."
The dollar pulled away on Wednesday from the previous session's 4-1/2-month low against the yen as investors' concerns over North Korea eased for now.
Geopolitical risks can boost demand for safe-haven assets such as gold, considered a good store of value during volatility in other markets.
North Korea said on Wednesday it had conducted a test of an intermediate-range ballistic missile (IRBM) to counter U.S. and South Korean military drills.
The United States will not allow North Korea's lawlessness to continue and it is time for Pyongyang to recognise the "danger they are putting themselves in" as the world is united against them, U.S. Ambassador to the United Nations Nikki Haley said on Tuesday.
"An overbought RSI (Relative Strength Index) and some heavy data days from the U.S. into Friday's Non-Farm Payrolls may slow the charge for now, but overall the technical picture (for gold) remains constructive," said Jeffrey Halley, a senior market analyst at OANDA.
Spot gold is expected to retest a resistance level at $1,326 per ounce, said Reuters technical analyst Wang Tao.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.3 percent on Tuesday.
In other precious metals, silver rose 0.6 percent to $17.45 per ounce, but was trading below its more than two-month peak of $17.67 touched on Tuesday.
Platinum climbed 0.2 percent to $994.30 per ounce. In the previous session, the metal hit its highest since early March at $1,006.30.
Palladium was mostly unchanged at $942.99 per ounce. It hit its highest in more than 16 years in the previous session at $949.10 an ounce.
(Reporting by Arpan Varghese in BENGALURU; Editing by Richard Pullin and Tom Hogue)