Gold hits one-year high as tensions over North Korea nuclear test escalate

Gold prices shot up on Monday to their highest in close to a year as investors bought safe-haven assets on worries that North Korea might launch more missiles after its sixth and largest nuclear test.

A weaker dollar also underpinned gold, which is likely to continue its upward momentum in the coming days, said Tom Kendall, head of precious metals strategy at ICBC Standard Bank.

"We've got the geopolitics and we've also got a fairly benign interest rate environment. There's still nothing threatening coming out of the Fed," he said, referring to the US central bank.

Gold is highly sensitive to rising interest rates because they increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which gold is priced.

Spot gold was up 0.6 per cent at $1,333.01 an ounce by 1415 GMT, having touched its strongest level since late September at $1,339.47.

US gold futures for December delivery were up 0.6 per cent at $1,338.80.

South Korea said on Monday that it was talking to the United States about deploying aircraft carriers and strategic bombers to the Korean peninsula after signs that North Korea might launch more missiles.

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