February 24, 2017 / 3:53 AM / 7 months ago

PRECIOUS-Gold climbs to 3-1/2 month high amid political worries

    * Spot gold may gain more to $1,278/oz - techs
    * Silver on track for ninth straight weekly gain

 (Adds details, quotes)
    By Arpan Varghese
    Feb 24 (Reuters) - Gold hit its highest in about
3-1/2-months on Friday, on a weaker dollar and as uncertainties
surrounding U.S. President Donald Trump's policies and elections
in Europe fueled safe-haven demand.
    Spot gold        was up 0.4 percent at $1,254.10 per ounce
at 0809 GMT, after touching its highest since Nov. 11 at
$1,254.31 earlier in the session. 
    The dollar index        was down 0.2 percent at 100.87.
    U.S. gold futures         edged up 0.3 percent to $1,255.
    Tempered expectations of a U.S. rate hike in March following
the release of the minutes from the U.S. Federal Reserve's last
meeting were also seen supporting the bullion. 
    "Even in the event of a rate increase, we doubt the precious
metal will lose much ground ahead of the key presidential
elections in France in April, coupled with the Washington
gridlock that seems to be calcifying with greater intensity
after each passing day," said INTL FCStone analyst Edward Meir.
    While many Fed policymakers said it may be appropriate to
raise interest rates again "fairly soon," according to the
minutes, they also hinted at the depth of uncertainty at the
bank over lack of clarity on the new administration's economic
programme.             
    "Uncertainty about the policy of the Trump administration,
protectionism, and fears of a trade and currency war seems to
have offset the hawkish comments from the Fed officials," said
Commerzbank analyst Carsten Fritsch.
    Trump on Thursday called China "grand champions" of currency
manipulation, doing little to raise confidence on trade
relations between the world's two biggest economies.
            
    Political uncertainties have triggered continuous inflows
into gold exchange traded funds (ETFs), which seems to be the
main driver for gold prices at the moment, Fritsch added.
    Holdings of the largest gold-backed ETF, New York's SPDR
Gold Trust                , have risen over 5 percent this
month.
    Investors are looking ahead to an address by Trump to
Congress next week for further clarity on his economic policy.
    Meanwhile, U.S. Treasury Secretary Steven Mnuchin on
Thursday laid out an ambitious schedule to enact tax relief for
the middle class and businesses by August.                 
    Mnuchin's comments "...signaling a delay until August of the
much vaunted tax reform package, gave gold bulls the uncertainty
green light they needed to take the yellow metal higher," said
Jeffrey Halley, a senior market analyst at OANDA.
    Spot gold may gain more to $1,278 as it has more or less
broken above a resistance at $1,249, said Reuters technical
analyst Wang Tao.             
    In other precious metals, silver        was up 0.4 percent
at $18.22 per ounce after touching its highest in 3-1/2-months
at $18.25. Silver has gained about 1.5 percent this week in what
could be its ninth straight weekly gain.
    Platinum        rose 0.8 percent to $1,010.74 per ounce,
while palladium        gained 0.1 percent to $773.75.

 (Reporting by Arpan Varghese and N R Sethuraman in Bengaluru;
Editing by Richard Pullin and Subhranshu Sahu)
  

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