Gold touched its highest in more than six weeks on Tuesday as Asian stock markets and the U.S. dollar weakened ahead of a UK national election and a European Central Bank meeting scheduled for Thursday. Also on Thursday, James Comey, former head of the US Federal Bureau of Investigation, is due to appear before a Senate committee for the first time. Comey was fired by President Donald Trump in May while leading a probe into alleged Russian meddling in last year’s US election.
The events all have the potential to boost the safe-haven appeal of bullion, which is often used as an investment option during times of political and financial uncertainty. “Much will, of course, depend on the U.S. dollar. However, with event risk in the form of this Thursday’s ECB rate decision and the UK general election, one would expect the safe haven bid to be alive and well as the week progresses,” said Jeffrey Halley, a senior market analyst at OANDA.
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Spot gold rose 0.4 percent to $1,283.94 per ounce at 0405 GMT. It hit a peak of $1,284.96 an ounce early in the session, its highest level since April 21. U.S. gold futures were up 0.4 percent to $1,287.1 an ounce. In Britain, Prime Minister Theresa May’s lead over the opposition Labour Party has narrowed to just 1 percentage point, according to a poll by Survation for ITV television on Monday. The vote is now expected to be much tighter than previously predicted.
“A decent win for the incumbent should ease any geopolitical fears. A hung parliament or a move towards the Labour Party could lead to some uncertainty fuelling gold prices,” said National Australia Bank analyst John Sharma. Meanwhile, ECB policymakers are set to take a more benign view of the economy when they meet on Thursday and will even discuss dropping some of their pledges to ramp up stimulus if needed, four sources with direct knowledge of the discussions told Reuters last week.
In the wider markets, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2 percent, while the dollar index touched a seven-month low against a basket of major currencies. Among other precious metals, palladium rose 0.1 percent to $842.25 an ounce. It hit its strongest level since September 2014 at $849.40 on Monday. Silver gained 0.5 pct to $17.59. It hit a peak of $17.647 on Monday, highest since April 26. Platinum was up 0.5 pct at $955.