Gold prices extended previous gains in Asian trade on Wednesday in the light of higher geopolitical tensions on the Korean peninsula.


On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.70 percent or $8.80 higher at $1,271.40 a troy ounce as of 07:05 GMT.


Following comments from President Donald Trump assuring his country would respond to any threat with “fire and fury”, Kim Jong un’s government said it is “carefully examining” a possible missile attack on Guam, an unincorporated territory of the United States in the western Pacific.


Geopolitical tensions promote uncertainty in financial markets. Periods of uncertainty are seen as positive for safe haven assets such as gold, the euro or the Japanese yen.


Earlier in the session, China presented its consumer price index for July. According to data, prices rose 0.1 percent last month, against expectations for a 0.2 percent monthly growth. Year over year prices increased by 1.4 percent, also below a forecasted 1.5 percent build. The producer price index grew 5.5 percent, in line with analysts estimation.


The yellow metal settled in red territory on Tuesday following upbeat job data from the United States Labor Department. Job openings rose by 461,000 in June to a seasonally adjusted 6.2 million in June, the highest level since 2000.


The producer price index and the consumer price index data set for release on Thursday and Friday remain in focus as they are expected to provide fresh direction to the precious metal.


A rising rates environment lifts the opportunity cost of holding non yielding assets such as the dollar denominated gold, while promoting demand for the American currency.


According to Fed funds tracked by CME Group’s FedWatch tool, market players are currently pricing in a 42.5 percent probability of a third rate hike by December.