Gold prices rose for a third straight session on Tuesday as the dollar languished near a five-week low, as investors eyed rising tensions between Russia and the West even as a US-China trade spat appeared to ease.

Spot gold was up 0.16 per cent at $1,355.19 per ounce at 0739 GMT, after touching $1,356.66 earlier in the session, its highest since February 16. US gold futures for April delivery were flat at $1,355 per ounce.

“Gold prices continue to ratchet higher as the US dollar weakens despite equity markets rebounding on easing concerns about the likelihood of a trade war between China and USA,” Stephen Innes, APAC trading head at OANDA, said in a note.

“Realistically there are plentitudes of market turmoil in the making that continue to make gold the go-to place to hedge risk.”

Against a basket of six other major currencies, the dollar index was flat at 88.998. The index fell to an over five-week low of 88.942 earlier in the day.

Asian share markets rallied on Tuesday with a revival of investor appetite for riskier assets as reports of talks between the United States and China rekindled hopes a damaging trade war could be averted.

Gold, which is sought as a store of value in times of political and financial uncertainty, becomes less expensive when the greenback weakens.

On Monday, gold prices rose to a more than five-week high after the United States said it would expel 60 Russian diplomats, joining governments across Europe in punishing the Kremlin for a nerve agent attack on a former Russian spy in Britain.

Russian Deputy Foreign Minister Sergei Ryabkov said on Tuesday that Moscow would respond harshly to the US decision, but was still open to strategic stability talks with Washington, the RIA news agency reported.

Analysts also see the yellow metal being supported by last week's statement from the US Federal Reserve which forecast at least two more hikes for 2018 instead of the three that many had expected.

“The Federal Reserve's March meeting emerged as a turning point for gold,” analysts at UBS said in a note.

UBS had on Monday raised its three-month forecast range to $1,300-$1,400 per ounce, and six- and 12-month forecasts to $1,375.

Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell 0.38 per cent to 847.30 tonnes on Monday from 850.54 tonnes on Friday.

In other precious metals, spot silver was up 0.7 per cent at $16.77 per ounce after hitting a near 3-week high of $16.80 earlier in the session. Platinum was up 0.6 per cent at $957.49 per ounce, while palladium was 0.4 per cent higher at $978.

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