Gold inched up on Friday as North Korea's latest missile launch over Japan triggered safe-haven buying, but gains were limited as strong U.S. inflation data raised the spectre of another interest rate hike.

Spot gold edged up 0.1 percent to $1,330.79 an ounce by 0321 GMT, after dropping to its lowest since Aug. 31 at $1,315.71 in the previous session.

The metal was, however, down 1 percent for the week, and on track to mark its first weekly decline in four.

U.S. gold futures for December delivery gained 0.4 percent to $1,334.80 an ounce.

North Korea fired a missile on Friday that flew over Japan's northern island of Hokkaido far out into the Pacific Ocean, South Korean and Japanese officials said, further ratcheting up tensions after Pyongyang's recent test of a powerful nuclear bomb.

Geopolitical risks can boost demand for safe haven assets such as gold and the Japanese yen.

The yen held steady against the dollar on Friday, after earlier having risen on the news, with further losses for the greenback capped after strong U.S. consumer inflation data.

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"There are a couple of issues pushing and pulling at the market. The reaction to the missile launch this morning has been a bit negated by that better-than-expected inflation number we saw out of the U.S. overnight," ANZ analyst Daniel Hynes said.

"I think the market is increasingly focusing on the Federal Reserve and its probability of another rate hike this year."

The Fed has a 2 percent inflation target, and a series of subdued inflation readings have dampened expectations for further rate rises in the near term. Firming inflation could support the case for another rate hike.