Gold hits highest in over a month on Brexit, Trump concerns

The pound and stocks also slid on fears of a "hard" Brexit.

FILE: Gold bullion. Picture: WikiCommons

LONDON - Gold rallied to its highest level in more than a month on Tuesday as the dollar dipped ahead of a news conference on Wednesday by US President-elect Donald Trump.

The market is looking for more clues on Trump's spending plans in the first speech since his shock win in November, pushing the dollar lower.

The pound and stocks also slid on fears of a "hard" Brexit after British Prime Minister Theresa May said at the weekend she was not interested in Britain keeping "bits" of its EU membership.

Gold, often seen as an alternative investment during times of political and financial uncertainty, benefited from the risk-averse sentiment in the market.

Spot gold hit its highest since 5 December at $1,187.61 an ounce and was up 0.2% at $1,184.46 an ounce at 1250 GMT.

US gold futures were flat at $1,183.70 per ounce.

ABN AMRO commodity strategist Georgette Boele said the combination of a soft dollar, lower US yields and risk aversion created a supportive environment for gold.

"We have this Trump conference coming up tomorrow and the market seems to be a bit nervous ahead of it," Boele said, adding that this sentiment would be short-lived as US. interest rates are expected to rise at least three times, denting gold.

Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding the non-yielding asset while boosting the dollar, in which it is priced.

Strong physical demand from the Chinese new year also buoyed prices, Marex Spectron's head of precious metals David Govett said.

"Gold seems to be behaving true to January form at the moment, with physical demand picking up ahead of the Chinese Lunar new year and investors starting to buy as the great unknown of the Trump presidency looms," he said.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.06% to 805.00 tonnes on Monday. The holdings have dropped about 15% since the November US presidential elections.

Silver inched up 0.3% to $16.56 an ounce and platinum was down 0.8% at $974. Platinum rose to a two-month high of $981.90 an ounce in the last session.

Palladium fell 0.3% to $758.60 per ounce.