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Gold climbs more than 1% as risk appetite wanes
[NEW YORK] Gold rose more than one per cent on Wednesday as escalating tensions in Syria, US sanctions on Russia and the US-China trade stand-off weighed on stock markets and the dollar index.
The metal hit a two-week high as appetite for nominally lower-risk assets sharpened. Palladium, which has also benefited from expectations that sanctions on Russia could hurt supply, rose further after climbing nearly 6 per cent in the past two days.
Spot gold gained 1.4 per cent to US$1,358.06 per ounce by 1.33pm EDT (17.33 GMT), down from US$1,365.23, its highest since Jan 25. June US gold futures settled up US$14.10, 1.1 per cent, at US$1,360 per ounce.
"The safe haven bid, recently with Syria tensions along with the weaker dollar, continues to support gold today," said David Meger of High Ridge Futures in Chicago.
That has sparked good demand for gold through products such as bullion-backed exchange-traded funds, said Capital Economics analyst Simona Gambarini.
"Gold is benefiting from the risk-off sentiment and because people are trying to hedge against worst-case scenarios."
European equities fell after two days of gains as tensions over Syria and US sanctions drove Russia's rouble to a two-year low, while concerns about the prospect of a trade war boosted traditional safety plays at the US dollar's expense.
The greenback languished near a two-week low against a basket of currencies.
Gold is often perceived as a safe store of value during times of political and financial uncertainty.
Markets await clues on the outlook for US monetary policy from minutes of the March meeting of the Federal Open Market Committee (FOMC), due 2pm EDT Wednesday. Tighter monetary policy raises the opportunity cost of holding non-yielding bullion.
Caught within a US$1,300-US$1,360 trading range since the end of January, gold needs to break that resistance to make a sustained move out, analysts have said.
Meanwhile, silver increased 1.4 per cent to US$16.79 an ounce, earlier reaching US$16.87, a near two-month high.
Platinum rose one per cent to US$933.30 per ounce, touching US$941.60, a two-week high.
Palladium increased 1.2 per cent at US$963.50 per ounce, earlier reaching US$971.30, a two-week high. The metal, more than 40 per cent of which is produced in Russia, bounced strongly this week as sanctions against Moscow fed into a technically-driven rebound after the first quarter's 10 per cent slide.
Although Russian palladium output has not been affected directly, the sanctions have caused enough concern over supply in a market that has been in deficit for a decade to bring some speculative money back in, analysts said.