Gold prices rose on Tuesday, hitting their highest in nearly a week as the US dollar weakened and investors awaited potential US action against suspected use of chemical weapons in Syria.
Trump on Monday promised quick, forceful action in response to a deadly suspected chemical weapons attack in Syria, appearing to suggest a potential military response.
‘Geopolitics is taking the main driving seat this week, so gold has potentially got some room for the upside,’ said Jonathan Butler, commodities analyst at Mitsubishi in London.
‘A lot will hinge on what is happening geopolitically between Russia, Syria, Iran and all sorts of other countries that could be potentially drawn into this.’
Spot gold was up 0.4 per cent at $US1,341.29 an ounce, its highest since April 4.
June US gold futures settled up $US5.80, 0.4 per cent, at $US1,345.90 per ounce.
Gold is often seen as a store of value during times of geopolitical and economic uncertainty.
Gold got a boost as the dollar index dipped to a two-week low against a basket of currencies. The dollar had risen earlier after Chinese President Xi Jinping’s promise to cut import tariffs eased concerns about a trade conflict.
Jinping’s comments spurred a rally in global equity markets, that capped gold’s safe haven appeal despite the weakening US dollar, said Bob Haberkorn of RJO Futures in Chicago.
‘The upside has been limited due to the fact that China appears to be offering some concessions to the trade war,’ he said. He said gold could move higher if trade tensions re-escalate or if bullion reaches $US1,350, near the top end of its latest trading range.
Silver gained 0.7 per cent at $US16.57 an ounce.