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Gold shines as geopolitical worries weigh on riskier assets

[JOHANNESBURG] Gold jumped to its highest in more than nine months on Friday as the US dollar retreated on political uncertainty in the United States and a suspected Islamist attack in Spain boosted bullion's safe-haven appeal.

Spot gold touched its highest since Nov 9 at US$1,300.80 per ounce, and by 1333 GMT was trading up 0.8 per cent at US$1,298.51.

"There is clearly more for financial markets to be concerned about," Danske Bank analyst Jens Pedersen said, referring to US political uncertainty and the attack in Spain. "That has led to a risk-off environment, and that's supportive for gold."

Spain mounted a sweeping anti-terrorism operation on Friday after a suspected Islamist militant drove a van into crowds in Barcelona, killing 13 people in what police suspect was one of a planned wave of attacks.

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Markets were also uncertain about US President Donald Trump's ability to push ahead with policies after the disbandment of two high-profile business advisory councils over his remarks on violence in Virginia.

US gold futures for December delivery were up 1 per cent at US$1,305.

The US dollar fell to a four-month low against the Japanese yen, which along with gold is often seen as a safe-haven in times of political and economic turmoil.

Meanwhile, world stocks fell for a second straight session as investors piled into German and US Treasury bonds.

"The discord coming out of Washington could prove supportive for gold as well, as this could pressure the US dollar further, just as the Fed is casting fresh doubts about its (interest) rate timetable," said INTL FCStone analyst Edward Meir.

Policymakers in Europe and the US expressed concerns about unwinding monetary stimulus too soon.

Gold is sensitive to rising interest rates because they push up bond yields, increasing the opportunity cost of holding non-yielding bullion while tending to strengthen the US dollar, in which gold is priced.

Spot gold faces resistance at US$1,291 an ounce and could hover below this level or retrace towards support at US$1,271 again, said Reuters technical analyst Wang Tao.

Among other precious metals, silver climbed 1 per cent to US$17.17 an ounce, having touched a two-month high of US$17.25.

Platinum was up 1.2 per cent at US$974.80, on track for a third straight week of gains.

Palladium touched a 16-year high of US$934 before giving back some gains to trade 0.2 per cent up at US$927, on course for a weekly gain of about 4 per cent.

REUTERS

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