Gold edged higher overnight, and was on track to post a weekly gain for fifth straight week, as fresh sanctions on Iran by the United States stoked uncertainty supporting demand for the bullion.
The targets of the sanctions included Iran’s manufacturing, mining and textile sectors as well as senior Iranian officials who Washington said were involved in the January 8 attack on military bases housing US troops.
Spot gold rose 0.4 per cent to $US1,557.86 per ounce and was up about 0.4 per cent for the week.
US gold futures settled up 0.4 per cent at $US1,560.1 per ounce.
“The main catalyst for gold prices is the dialogue that’s taking place over Iran and weather or not we are going to see an acceleration of the conflict… The instability over that is causing all the volatility,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.
With the sanctions its becoming obvious that there is going to be even economic consequences, Sica added.
Gold, often considered a safe investment during political and economic turmoil, surged above $US1,600 on Wednesday after Iran launched missile strikes on US forces in retaliation for the killing of its top commander in a drone attack.
However, prices retreated 4 per cent after the two sides softened their stance.
“The pullback that we saw the last couple of days gave people an opportunity to buy today,” said Michael Matousek, head trader at US Global Investors.
“There’s some resistance at $US1,562 but if it trades up through there, that’s going to be a key level to where short-term traders are going to be involved.”
Meanwhile, data from the US Labor Department showed job growth slowed more than expected in December helping prop up the bullion further.
The US dollar also fell from four-week highs against the safe-haven yen and slid versus the Swiss franc on the possibility of renewed tensions in the Middle East.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell for the second straight session on Thursday.
Elsewhere, palladium was up 0.4 per cent at $US2,115.88 per ounce, having hit a record peak of $US2,149.50 in the previous session on supply constraints. The metal was still on track for its biggest weekly rise since mid-June, up more than 6 per cent so far.
Silver was up 0.9 per cent at $US18.06 per ounce.
Platinum gained 1.3 per cent to $US978.48 per ounce but was down 0.2 per cent for the week so far.