Gold prices rose to more than five-week highs on Monday after the United States said it would expel 60 Russian diplomats, prompting investor flight into assets considered safe havens.

The United States was joining governments across Europe in taking action against the Kremlin after a nerve agent attack on a former Russian spy in Britain.

Gold, which is sought as a store of value in times of political and financial uncertainty, rose to its highest since February 16 at $US1,355.97 an ounce.

Spot gold was up 0.6 per cent at $US1,354.62 per ounce in afternoon trade, while US gold futures for April delivery settled up $US5.10, or 0.4 per cent, at $US1,355 per ounce.

‘I would attribute the rise in gold in the afternoon to the political developments,’ said Quantitative Commodity Research consultant Peter Fertig. ‘You could expect the Russians to retaliate.’

The US dollar index fell to a five-week low against a basket of major currencies.

The spectre of a global trade stand-off, however, appeared to be receding after the United States and South Korea agreed to revise a trade pact, with US automakers winning improved market access and Korean steelmakers hit with quotas but avoiding hefty tariffs.

‘We don’t know what the negotiations will bring, so there’s less of a fear, because negotiations seem to be going on,’ said George Gero, managing director of RBC Wealth Management.

The Wall Street Journal, meanwhile, reported that the United States and China had started negotiations to improve US access to Chinese markets.

Analysts said gold continued to be supported by last week’s statement from the US Federal Reserve, which forecast at least two more increases to interest rates in 2018, one less than previously expected by many observers.

Investors continued to monitor other developments, such as US President Donald Trump’s appointment of John Bolton as national security adviser and tensions between Saudi Arabia and Yemen’s Houthi militia.

Speculators cut their net long positions in gold in the week to March 20 by 23,822 contracts to 121,838 contracts, US Commodity Futures Trading Commission data showed on Friday.

‘I think there’s a high probability that we will be trading above $1,400, maybe into $1,700 by the end of the year,’ said Dan Pavilonis, senior market strategist at RJO Futures.

Meanwhile, silver climbed one per cent at $16.68 an ounce, earlier hitting $US16.79, its highest since March 7.