Gold steady near 1-week high on North Korea worries

Gold eased under pressure from the dollar on Tuesday but was still near one-week highs as North Korea appeared to have boosted coastal defences amid rising tension with the United States.

Spot gold shed 0.4 percent to USD 1,305.18 per ounce at 1011 GMT, after earlier marking its highest since September 20 at USD 1,313.54. It gained more than 1 percent the previous session.

U.S. gold futures rose 0.3 percent to USD 1,308 per ounce.

"Geopolitics haven't come off the table. They are still front and centre but after a rally you tend to get a tiny bit of a pullback," said ETF Securities commodity strategist Nitesh Shah.

"The rhetoric from both North Korea and the United States remains quite heated."

North Korea appears to have boosted defences on its east coast, South Korea's Yonhap news agency reported, after the North said U.S. President Donald Trump had declared war and that it would shoot down U.S. bombers flying near the peninsula.

Bullion is used as an alternative investment during times of political and financial uncertainty, generally gaining along with U.S. Treasuries and the Japanese yen.

Elsewhere, investors awaited a speech on "inflation, uncertainty, and monetary policy" by U.S. Federal Reserve Chair Janet Yellen, in Cleveland at 1645 GMT.

Ahead of Yellen's speech, Fed officials gave mixed signals on the likely path for interest rate increases.

New York Fed President William Dudley said the U.S. central bank is on track to gradually raise rates given factors that have depressed inflation are "fading", while two other Fed officials expressed the need to stay put on further tightening.

Gold is highly exposed to interest rates and returns on other assets, as rising rates lift the opportunity cost of holding non-yielding bullion.

The U.S. dollar index gained 0.3 percent against a basket of currencies, making commodities including gold more expensive for holders of other currencies.