Gold got an extra boost after data showed United States consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.
Foreign investors offloaded shares worth more than 648 billion won (US$566 million), while institutions scooped up more than 678 billion won. "What we're seeing today is political tensions over North Korea and the United States. making people nervous", said Robert Pavlik, chief market strategist at Boston Private Wealth in NY.
North Korea and the United States have traded bellicose rhetoric after the United Nations Security Council further tightened sanctions on North Korea for its two tests of intercontinental ballistic missiles last month.
"We're still close to the all-time high so that makes people a little nervous too, so they might say now might be the time to take a little bit of money off the table".
With Japanese markets closed for a public holiday, Hong Kong led the downward charge in Asia-Pacific as the Hang Seng lost more than two percent.
U.S. gold futures for December delivery was mostly unchanged at $1,290.50 per ounce. The Korean won fell against the US dollar.
In currencies, the yen rose 0.8 percent versus the greenback at 109.2 per dollar, the strongest level for the Japanese currency since mid June.
"Risk-off sentiment dominates Asian markets into the end of the week with President Donald Trump's words still sending shockwaves into the markets", said Jingyi Pan, market strategist at online trader IG.
"Both (PPI measures) were well below consensus and give us no hope that consumer price inflation is going to materially beat expectations", said Chris Weston, chief market strategist at IG Markets. The dollar index slipped to a one-week low on Friday after the United States data. The yield on three-year Treasurys fell 2.0 basis points to 1.804 percent and the return on benchmark five-year government bonds shed 2.0 basis points to 2.004 percent.
US crude was unchanged at $48.59 per barrel and Brent was last at $51.84, down 1.63 percent on the day.
Spot gold inched down 0.1 per cent to $1,284.64 per ounce as of 0616 GMT, but was set for a weekly gain of over 2 per cent.
Geopolitical risks can boost demand for assets considered safe-haven investments, such as gold.