* Political uncertainty supports demand for bullion
* SPDR Gold holdings have risen 5.6 percent this month
* Palladium off over 3-week highs hit Thursday
(Updates prices, dollar rates)
By Eric Onstad
LONDON, Feb 17 Gold crept higher on Friday as
investors opted for the safe haven qualities of bullion due to
uncertainty about U.S. and European politics as well as the
direction of stock markets.
Global equity markets lost momentum after setting record
highs in the previous two sessions, partly due to disquiet about
the policies of U.S. President Donald Trump.
"Gold is close to its recent multi-month high despite the
strong dollar, due to an increase in volatility on the equity
markets and more uneasiness on the political front, which is
supporting the search for safe-haven assets," said Eugen
Weinberg, head of commodity research at Commerzbank.
Spot gold gained 0.2 percent to $1,241 per ounce by
1520 GMT, while U.S. gold futures added 0.1 percent to
Gold, on track for a third week of gains, has risen nearly 8
percent in 2017.
Concern over Trump's policies, as well as elections in the
Netherlands, France and Germany this year, fueled gold's rise to
a peak of $1,244.67 on Feb. 8, the strongest in nearly three
"Dealers are extremely cautious about running the market
higher as the March Fed rate hike debate will likely play out
for the foreseeable future," said Stephen Innes, senior trader
Strong recent U.S. data has boosted expectations for a hike
with Citi Research's barometer on U.S. economic data
surprises rising to its highest in over three years following a
batch of stronger-than-forecast reports.
Prospects of a stronger dollar and U.S. Treasury yields
after Fed Chair Janet Yellen said U.S. interest rates may need
to be raised in March had dragged gold to $1,216.41 on
Wednesday, its lowest since Feb. 3.
The dollar index rose 0.3 percent to 100.75 on
Friday, recovering from a one-week low of 100.41 the day before.
Holdings of SPDR Gold, the world's largest gold-backed
exchange-traded fund (ETF), have risen 5.6 percent so far this
month, the most since June 2016.
"The market seems to be quite supported by investment
inflows into the ETFs and I think this will be the most
important factor through the year as we expect investors to keep
pouring money into gold ETFs," Weinberg added.
Commerzbank expects gold to hit $1,300 by year end.
Spot silver fell 0.4 percent to $18.01 an ounce. The
metal hit its strongest since Nov. 11 at $18.13 in the previous
Platinum dropped 0.8 percent to $1,003.74.
Palladium declined 1 percent to $784.22. The metal,
used in emission-controlling catalytic converters for the
automotive industry, touched its best since Jan. 24 at $794.90
in the prior session. It has gained over 16 percent so far this
"Palladium still appears to be finding support from the
still buoyant automotive economy. What is more, palladium ETFs
have seen inflows of a good 20,000 ounces in the last two days,"
Commerzbank analysts said in a note.
(Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by David Holmes and David Evans)