Gold hits highest in over a month on Brexit, Trump concerns
"Gold seems to be behaving true to January form at the moment, with physical demand picking up ahead of the Chinese Lunar new year and investors starting to buy as the great unknown of the Trump presidency looms," Boele said.
Gold rallied to its highest level in more than a month on Tuesday as the dollar dipped on jitters before a news conference by U.S. President-elect Donald Trump on Wednesday and on Britain`s uncertain exit from the European Union.
The market is looking for more clues on Trump`s spending plans in the first speech since his shock win in November, pushing the dollar lower.
The pound and stocks also slid on fears of a "hard" Brexit after British Prime Minister Theresa May said at the weekend she was not interested in Britain keeping "bits" of its EU membership.
Gold, often seen as an alternative investment during times of geopolitical and financial uncertainty, benefited from the risk-averse sentiment in the market.
Spot gold hit its highest since Dec. 5 at $1,187.61 an ounce and was up 0.2% to $1,183.61 an ounce by 1030 GMT.
U.S. gold futures climbed 0.1% to $1,183.60 per ounce.
ABN AMRO commodity strategy Georgette Boele said the combination of a soft dollar, lower U.S. yields and risk aversion created a supportive environment for gold.
"We have this Trump conference coming up tomorrow and the market seems to be a bit nervous ahead of it," Boele said, adding that this sentiment would be short-lived as U.S. interest rates are expected to rise at least three times, denting gold.
Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding the non-yielding asset while boosting the dollar, in which it is priced.
Strong physical demand from the Chinese new year also buoyed prices, said Marex Spectron`s head of precious metals David Govett.
"Gold seems to be behaving true to January form at the moment, with physical demand picking up ahead of the Chinese Lunar new year and investors starting to buy as the great unknown of the Trump presidency looms," he said.
Holdings of SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, fell 1.06% to 805.00 tonnes on Monday. The holdings have dropped about 15% since the November U.S. presidential elections.
Silver was flat at $16.57 an ounce and platinum was 0.4% higher at $970. Platinum rose to a two-month high of $981.90 an ounce in the last session.
Palladium was set to gain for the sixth straight session, up 0.1% at $754.50 an ounce after rising to its highest in more than a month on Monday.