Spot gold edged up 0.1 percent to $1,330.79 an ounce by 0321 GMT, after dropping to its lowest since August 31 at $1,315.71 in the previous session.
Although the fundamentals are liable to put some downward pressure on gold, there will be a reluctance to sell given concerns over a renewed spike in North Korea fears.
Demand for safe-haven assets strengthened following news North Korea fired a missile over Japan into the Pacific Ocean late Thursday. It was heading for a second weekly decline.
U.S. Secretary of State Rex Tillerson called for the worldwide community to take “new measures” against North Korea, singling out Russian Federation and China as the countries best placed to apply pressure on the regime.
Overnight, gold prices rose for the first time in three days after the dollar came under pressure but gains were capped as data showed the pace of US consumer prices hit a 7-month high in August raising expectations for a Federal Reserve rate hike later this year. Gold dipped in the morning after unexpectedly strong jobs figures and a jump in inflation put a hike in USA interest rates back in focus.
In a separate report the U.S. Department of Labor reported that initial jobless claims decreased by 14,000 to 284,000 in the week ended September 10, confounding forecasts of a 2,000 increase.
Despite the pullback from one-year highs over the last week, gold is still trading more than $120 an ounce higher than its summer lows struck in early July.
Gold is sensitive to moves in the dollar.
There were two more reasons behind rising gold prices.
In another day of heavy volumes with just under 33m ounces changing hands on the Comex market in NY gold for delivery in December edged up to $1,333.60 an ounce.