SINGAPORE, Sept 6 — Gold prices held steady today, supported by geopolitical tensions over North Korea and expectations that low inflation in the United States could delay another interest rate hike there.

Spot gold was nearly unchanged at US$1,338.10 (RM4,601.76) per ounce by 0641 GMT, after touching its highest since September 2016 in the previous session.

US gold futures for December delivery edged 0.1 per cent lower to US$1,343.40.

"We're being driven by headlines and a weaker dollar and not necessarily by fundamental reasons, so I'm a little cautious of these levels," said Jeffrey Halley, a senior market analyst at OANDA.

"I think headlines regarding the Korean peninsula could cause short-term spikes but it wouldn't surprise me if gold ran out of a bit of momentum."

A top North Korean diplomat yesterday warned that his country was ready to send "more gift packages" to the United States as world powers struggled for a response to Pyongyang's latest nuclear weapons test. The US dollar edged down against the yen today, pushed back toward a recent 4-1/2-month low by the simmering tensions over North Korea and by comments from a Federal Reserve official about subdued US inflation.

Fed policymakers signalled caution on weak inflation and a few backed delaying further interest rate hikes.

Higher interest rates tend to boost the dollar and push up bond yields, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.

Spot gold may retest resistance at US$1,345 per ounce, a break above which could lead to a gain to the next resistance level at US$1,350, said Reuters technical analyst Wang Tao.

"The technical picture is extremely overbought. We could see a correction to the downside, possibly back almost towards the US$1,300-1,310 level," said OANDA's Halley.

"I suspect that people are bullish on gold, but they don't really want to buy it at these levels. So, I expect any dips to be met with quite a lot of buying now."

Among other precious metals, silver and platinum were both 0.1 per cent lower at US$17.87 an ounce and US$1,005.05 an ounce.

Palladium was up 0.7 per cent at US$964.50. — Reuters