Gold inched higher on Tuesday, supported by global political uncertainties, after touching a five-week low earlier in the session as a key US Federal Reserve official reaffirmed the central bank's hawkish stance on interest rate hikes.
Risk aversion due to Brexit, concerns over US President Donald Trump's ability to carry out financial reforms, election results in Europe and West Asian turmoil have provided some support for gold, said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
“We can see things are getting more complicated and investors have to take some time to put things into context,” To said.
Spot gold was up 0.3 per cent at $1,246.82 per ounce, as of 0809 GMT. US gold futures rose 0.1 percent to $1,247.8 per ounce.
Spot prices touched a low of $1,242.61 an ounce early in the session, the weakest since May 17, after New York Fed President William Dudley reinforced that recent weak data is unlikely to derail plans to keep raising interest rates.
Gold is used as an alternative investment during times of political and financial uncertainty.
British and EU Brexit negotiators agreed how to organise talks on Britain's divorce at a first meeting in Brussels on Monday, where both sides stressed goodwill but also the huge complexity and tight deadline.
Late Monday, Chicago Fed President Charles Evans said it may be worthwhile for the US central bank to wait until year-end to decide whether to raise rates again and that it should move slowly to raise them and trim its massive bond portfolio.
“Mixed USdollar trade provided some respite for gold during Asian trade on Tuesday, with modest physical interest out of the region evident underneath $1,250, however, not to the extent we expected we would see,” MKS PAMP trader Sam Laughlin said in a note.
The dollar index was last unchanged at 97.551 against a basket of currencies.
Spot gold may break a resistance at $1,248 per ounce and rise towards the next resistance at $1,251, as it failed to break a support at $1,243, according to Reuters technical analyst Wang Tao.
After having broken through the 100-day moving average, the 200-day moving average could be the next significant support for gold, said OANDA analyst Jeffrey Halley.
“A daily close below here suggests we could target the May lows.”
Among other metals, spot palladium climbed 0.5 per cent to $864.50 per ounce, and platinum gained 0.6 per cent to $927.60 per ounce. Silver edged up 0.8 percent to $16.58 per ounce. In the previous session, it touched $16.44, its weakest since May 18.