(Corrects session high to $1,288 from $1,2887 in paragraph 3)
* Investors on edge over simmering geopolitical tensions
* Trump says dollar too strong, Fed should keep rates low
* GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl
By Devika Krishna Kumar and Jan Harvey
NEW YORK/LONDON, April 13 Gold prices eased from
five-month highs on Thursday as the dollar rebounded from a
slide triggered by comments from U.S. President Donald Trump
that the greenback was too strong and that he would prefer the
Federal Reserve keep interest rates low.
The metal was up about 2.6 percent on the week, on track for
its biggest weekly gain since June, as concerns over tensions in
North Korea and the Middle East kept stock markets under
Spot gold was up 0.06 percent at $1,286.84 an ounce
by 2:26 p.m. EDT (1826 GMT), having earlier hit its strongest
since early November at $1,288.64 an ounce. U.S. gold futures
for June delivery ended 0.8 percent higher at $1,288.50.
"We think that gold prices could fall back in the near term
if tensions cool, as seems likely, and that they will continue
to fall as the Fed tightens policy later this year," Capital
Economics said in a note.
Trading volumes in wider markets have been light ahead of
the long Easter holiday weekend.
The dollar index , which tracks the greenback against
a basket of six trade-weighted peers, was up 0.4 percent, after
a 0.6 percent decline on Wednesday marked its biggest one-day
fall in three weeks.
Fears of a new weapons test by North Korea as a U.S. carrier
group sailed towards the region, as well as worries about the
upcoming French presidential election, still kept investors on
Russian President Vladimir Putin said on Wednesday trust had
eroded between the United States and Russia under Trump, as
Moscow delivered an unusually hostile reception to U.S.
Secretary of State Rex Tillerson in a face-off over Syria.
"We remain constructive on gold (given) elevated political
tensions in both Korea and Syria, coupled with a lower drift
evident in U.S. equity markets," INTL FCStone said in a note.
From a technical perspective, gold faces strong near-term
resistance at $1,291 an ounce, the location of a trendline
declining from its 2011 record high of $1,920.30 an ounce,
One of the major physical gold markets, India's imports of
the precious metal soared to $418 billion in March, data showed.
"The recent rise in imports is the result of the rise in
demand expected during the wedding season, which has just begun,
and for the Hindu festival of Akshaya Tritiya at the end of the
month," Commerzbank said in a note.
"In addition, there was probably something of a demand
backlog following a period in which Indian traders held back
with buying gold when the government suddenly launched its cash
reform, having used first of all their stocks."
Among other precious metals, silver was up 0.3
percent at $18.52, off a five-month high of $18.599 earlier in
the session. Platinum was 0.05 percent lower at $968,
while palladium was down 0.3 percent to $794.50.
(Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by David Holmes and Meredith Mazzilli)