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PRECIOUS-Gold hits 3-mth peak on heightened political risk
February 8, 2017 / 11:43 AM / 8 months ago

PRECIOUS-Gold hits 3-mth peak on heightened political risk

    * Political worries spur safe-haven demand for bullion
    * Spot gold hits 3-month high of $1,237.90
    * SPDR Gold holdings up for fifth straight session

 (Adds comments, updates prices)
    By Maytaal Angel
    Feb 8 (Reuters) - Gold hit a three month peak on Wednesday
as the political risk of European elections and worries over
U.S. President Donald Trump's policies stoked safe haven demand.
    Investors are concerned about the strong showing in the
French presidential race of far-right candidate Marine Le Pen,
who has promised to take France out of the euro zone and to hold
a referendum on European Union membership. 
    The euro fell another third of a percent against the dollar
on these risks, even though investors are also wary about
Trump's protectionism and immigration policy and his hints that
he would prefer a weaker dollar.
    "There's underlying demand for gold as a hedge against
political uncertainties on both sides of the Atlantic," said Ole
Hanson, head of commodity strategy at Saxo Bank. 
    "Retracements have been quite shallow the past couple of
weeks, especially the signal that gold wasn't going down when
the dollar started going up," he added.
    Spot gold        rose 0.2 percent at $1,236.16 per ounce by
1117 GMT, having earlier touched its highest since Nov. 11 at
$1,237.90.
    U.S. gold futures         rose 0.2 percent to $1,238.30 an
ounce.
    Indicating heightened worries over the French elections, the
gap between French 10-year government bond yields and their
low-risk German equivalents was at its widest since November
2012.
    "Gold prices will continue to rise until mid-February on
uncertainties in the U.S. and Europe. But once January CPI data
is released, it will give an idea about the possibility of a
rate hike in March," said Jiang Shu, chief analyst at Shandong
Gold Group.
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, climbed 1.01 percent to 826.95
tonnes on Tuesday from Monday. Holdings rose for a fifth
straight session.          
    The rise in holdings, along with recent data from U.S.
Commodity Futures Trading Commission (CFTC), show an increase in
long positions for managed money and a decrease in short
holders, MKS PAMP Group trader Alex Thorndike said.
    A bullish target at $1,249 per ounce has been temporarily
aborted for spot gold and will only be resumed when the metal
breaks above resistance at $1,237, according to Reuters
technical analyst Wang Tao.             
    Spot silver        rose 0.2 percent to $17.69, after marking
its highest since Nov. 11 at $17.79 in the previous session.
    Platinum        rose 0.9 percent to $1,012.70, after
touching its highest since Nov. 9 at $1,015.20 the session
before.
    Palladium        rose 0.7 percent to $767.60.

 (Additional reporting by Nallur Sethuraman; Editing by Ruth
Pitchford)
  

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