By Eric Onstad
LONDON (Reuters) - Gold prices shot up on Monday to their highest in close to a year as investors bought safe-haven assets on worries that North Korea might launch more missiles after its sixth and largest nuclear test.
A weaker dollar also underpinned gold, which is likely to continue its upward momentum in the coming days, said Tom Kendall, head of precious metals strategy at ICBC Standard Bank.
"We've got the geopolitics and we've also got a fairly benign interest rate environment. There's still nothing threatening coming out of the Fed," he said, referring to the U.S. central bank.
Spot gold was up 0.7 percent at $1,334.11 an ounce by 1230 GMT, having touched its strongest level since late September last year at $1,339.47.
U.S. gold futures for December delivery were up 0.7 percent at $1,339.40.
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South Korea said on Monday that it was talking to the United States about deploying aircraft carriers and strategic bombers to the Korean peninsula after signs that North Korea might launch more missiles.
The next technical target for spot gold was around $1,375, the high reached after last year's Brexit vote, Kendall added.
"If you've got a momentum-type trading model, things have been pretty good," he said. "It's not looking overextended or overbought just yet, so I think we can definitely get up to that $1,375 level."
The Japanese yen and sovereign bonds also climbed on Monday as North Korea's nuclear test provoked a knee-jerk shift to assets perceived as less risky while stocks markets fell.
"Another plus for gold is that we don't see an immediate rate hike and the shrinkage of the Federal Reserve's balance sheet," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
On Friday, after a U.S. government report showed that employers added fewer jobs than expected in August, traders held to expectations that the Federal Reserve would wait until the middle of 2018 before raising rates.
Gold is highly sensitive to rising interest rates because they increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which gold is priced.
Silver rose 0.6 percent to $17.79 an ounce, having hit its highest since late April at $17.90.
Platinum gained 0.4 percent to $1,008.75. It had previously marked its best since early March at $1,014.70.
Palladium dipped 0.1 percent to $979.75 after touching $1,001, its highest since February 2001.
The metal used in catalytic converters surged 5 percent on Friday, registering its biggest one-day jump since March 2016 after some U.S. automakers reported better than expected August sales and on an expected rise in demand from Houston to replace flood-damaged vehicles after Hurricane Harvey.
"The way palladium has moved and the speed at which it's moved since the beginning of August, I think it's getting to the point at which you would be very cautious of a significant correction back into the mid to low 900s over the next month or so," Kendall said.
(Additional reporting by Apeksha Nair in BENGALURU; Editing by Andrew Heavens and David Goodman)
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