Gold fell back early today after having touched 12-month highs last week, as relative calm returned to the Korean peninsula.
A lack of further missile tests from North Korea over the weekend saw some of the recent charge towards safe havens unwind.
At the same time, the US dollar was up slightly this morning, following its poor performance last week.
Spot gold eased by around 0.8%, trading at around $1,337 per oz, as investors began to switch from safe havens back to risk assets.
North Korea celebrated the government´s 69th anniversary with an outdoor rally rather than another missile test as many had feared.
Pain and suffering
Nevertheless, the hermit state warned it would unleash “pain and suffering” on the US in the event of further sanctions. The US is pushing for a UN resolution that would include measures such as a block on oil exports.
Gold reached a 12-month high of around $1,356 per oz last week in the aftermath of North Korea´s purported hydrogen bomb test. Days earlier, it outraged the international community by firing a missile over northern Japan.
The UN Security Council is due to vote on further sanctions against North Korea later today, though China and Russia could choose to veto the proposals.
The US dollar index edged up 0.11% this morning, as the dollar began to claw back some of last week´s losses.
Market expectations for another hike in US interest rates this year have fallen below 40%, despite the Federal Reserve (Fed) having previously forecast three rate increases for 2017.
The Fed raised interest rates in March and June by 0.25%, taking US rates to 1.25%.
Dollar weakness tends to favour assets such as gold, which is priced in dollars.