By Zandi Shabalala
LONDON (Reuters) - Gold prices rebounded from seven-week lows on Tuesday after North Korea fired a missile into Japanese waters, raising geopolitical tensions and boosting bullion's safe-haven appeal.
North Korea said it successfully test-launched an intercontinental ballistic missile, days before leaders from the Group of 20 nations were due to discuss steps to rein in Pyongyang's weapons programmes.
Gold is seen as a store of value and therefore a safe-haven investment in times of economic and political uncertainty, when investors tend to sell riskier assets such as stocks.
World shares, oil and bond yields pulled back on Tuesday as North Korea's long-range missile test and July 4 holidays for U.S. markets curbed investor appetite for risk. [MKTS/GLOB]
Spot gold settled up 0.3 percent at $1,223.60 an ounce, while U.S. gold futures were up 0.3 percent to $1,223 an ounce.
"The market is turning to gold over the conflict in North Korea," Danske Bank senior analyst Jens Pedersen said. "But the market isn't pricing in a further deterioration in relations because this conflict has been going on for a while."
Gold fell 1.7 percent on Monday, the most in one day since November and reaching its lowest point since May.
Hedge funds and other money managers reduced their net long positions in COMEX gold and silver for a third straight week in the week to June 27, U.S. Commodity Futures Trading Commission data showed.
"The prevailing threat of geopolitical tensions is likely to cause a knee-jerk reaction to safe-haven assets with bullion up over 8 percent for the year," Sucden Financial said in its quarterly report.
"Accordingly we anticipate impulsive demand for bullion to persist."
Silver slipped 0.1 percent to $16.07 an ounce, after touching its lowest since May 9 at $16.01.
"More investors are coming aboard at the current relatively low entry level for silver and physical demand has been robust both in Singapore and in Hong Kong," said Joshua Rotbart, managing partner of J. Rotbart & Co in Hong Kong.
Platinum rose 1.2 percent to $912 an ounce, having fallen on Monday to below $900 for the first time since May 10.
Palladium advanced 1 percent to $851.50 an ounce. The metal, mainly used to reduce carbon emissions in diesel cars, is the best-performing precious metal so far this year.
U.S. markets are closed on Tuesday for Independence Day.
(Additional reporting by Ethan Lou in Calgaruy, Alberta, and Vijaykumar Vedala and Koustav Samanta in Bengaluru; Editing by Susan Thomas and Richard Chang)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
