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PRECIOUS-Gold jumps to fresh 5-month peak on geopolitical worries
April 11, 2017 / 7:31 PM / 4 months ago

PRECIOUS-Gold jumps to fresh 5-month peak on geopolitical worries

    * Worries over political tensions support gold prices
    * SPDR Gold holdings rise 0.21 percent on Monday
    * GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl

 (Adds comments, milestone, updates prices, adds NEW YORK
dateline)
    By Devika  Krishna Kumar and Zandi Shabalala
    NEW YORK/LONDON, April 11 (Reuters) - Gold jumped nearly 2
percent to a fresh five-month high on Tuesday as investors
sought assets seen as havens from risk amid mounting political
and security concerns over North Korea, the Middle East and the
looming French election.
    Global tensions escalated as Western countries were joined
by Middle Eastern allies in a push to isolate Syrian President
Bashar al-Assad following a chemical attack in the country last
week.
    Spot gold        was up 1.53 percent at $1,273.44 per ounce
by 3:10 p.m. EDT (1910 GMT), after hitting a fresh high since
Nov. 10 at the session high of $1,275.16.
    U.S. gold futures         ended the session 1.6 percent
higher at $1,274.20.
    Uncertainty about the result of the upcoming French
presidential election and possible U.S. military strikes against
Syria and North Korea also boosted demand for safe-haven assets
among jittery investors.                          
    "Geopolitical events (this time concerning North Korea) have
seen gold break through $1,260," Metals Focus said in a note.
    "Although silver prices also improved, gold was the chief
beneficiary of the safe haven buying that emerged."
    Investors also bought the Japanese yen and U.S. Treasuries,
while the dollar index        fell and stocks took a knock. 
                        
    Meanwhile, the Federal Reserve plans to raise U.S. interest
rates gradually so as to sustain healthy growth without letting
the economy overheat, Fed Chair Janet Yellen said on Monday.
Rising interest rates lift the opportunity cost of holding
non-yielding bullion.             
    From a technical viewpoint, gold broke above the key chart
resistance at its 200-day moving average, fueling more buying.
    However, the rally above $1,260 could be hard to sustain "as
gold lacks momentum", Jeffrey Halley, senior market analyst at
OANDA said.
    "A break of $1,240 will prelude a deeper correction," he
said.
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, rose 0.21 percent to 838.26
tonnes on Monday from 836.49 tonnes on Friday.          
    Spot silver        was up 2.1 percent at $18.294 an ounce
after marking its lowest in more than two weeks at $17.71 in the
previous session. 
    However, looking ahead, the prospects for gold and silver
demand appear challenging, analysts said.
    "Anecdotes of silver scrap being amassed by the trade and,
for gold, the persistent discount averaging $15/oz in recent
months suggest that many consumers could remain net sellers for
at least some time to come," Metals Focus said.
    Platinum        rose 2.8 percent to $962.55 an ounce, after
hitting its weakest in over three weeks at $931.85 on Monday.
    The spread between gold and platinum hit its highest since
October 2016 at $318.23.
    "There is certainly more geopolitical risk at the moment and
that is more positive (for) gold than platinum and there is no
surprise in that sense to see the spread widen ... There is
generally a downbeat (sentiment) about diesel cars in Europe," a
London-based market analyst with a mining company said.
    Platinum is used in catalysts in diesel-powered vehicles,
which are going out of favour in Europe.
    Palladium        rose 2 percent to $804.05 after touching
its weakest in more than a week at $784.72 in the previous
session.

    
 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Mark Potter and Tom Brown)
  

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