By Eric Onstad
LONDON (Reuters) - Gold edged higher on Friday but is likely to revisit five-week lows after the prospect of a Korean denuclearisation deal eroded bullion's safe-haven appeal.
The leaders of South and North Korea embraced after pledging on Friday to work for the "complete denuclearisation of the Korean peninsula".
Spot gold was up 0.1 percent at $1,318.52 an ounce by 1245 GMT, not far from a low of $1,315.06 hit in the previous session, its weakest since March 21.
The metal was on track to finish the week down more than 1 percent for its second consecutive weekly decline and the biggest weekly drop in four.
U.S. gold futures added 0.1 percent to $1,319.40.
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"We have the pictures from the meeting of the two Korean leaders today, showing geopolitical hotspots have calmed down massively, so there's scant argument to be bullish on gold at the moment," said Carsten Fritsch, commodity analyst at Commerzbank in Frankfurt.
Adding to the pressure on gold, the dollar was firmer, bond yields higher and spot gold slipped below its 100-day moving average, he said.
Activtrades chief analyst Carlo Alberto De Casa said: "That's a very negative sign for technical oriented investors ... I expect gold to briefly dip below $1,300, but physical buying will kick in to support the price.
"The strength of the U.S. dollar - combined with the weakness of the eurozone currency after (ECB chief) Mario Draghi's speech - is pushing down the yellow metal."
The dollar hit a 3-1/2-month high against a basket of currencies on higher U.S. yields while the euro was hampered by a dovish tone from the European Central Bank.
On Wednesday the benchmark 10-year Treasury yield reached its highest since January 2014 at 3.035 percent.
A rise in U.S. bond yields pressures gold by reducing the attractiveness of non-yielding bullion, which is priced in dollars.
Silver rose 0.3 percent to $16.53 an ounce. It is down more than 3 percent this week, the biggest weekly drop since since the week ending Feb. 2.
Platinum dipped by 0.1 percent to $905.49 an ounce after touching $900.50, its weakest since Dec. 18.
Palladium eased by 0.5 percent to $979.60 an ounce. It has rallied nearly 10 percent since U.S. sanctions were imposed on Russian entities on April 6. Russia is the world's biggest producer of palladium.
The spread between platinum and palladium has widened to $75 from about $50 over the past three days.
"I expect the price gap between platinum and palladium to narrow again because palladium's rise was due to these unjustifed sanctions fears and the price weakness in platinum was exaggerated in the last few days," Fritsch said.
(Additional reporting by Swati Verma in Bengaluru; Editing by Jane Merriman and David Goodman)
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