February 8, 2017 / 1:13 PM / a year ago

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

    * Political worries spur safe-haven demand for bullion
    * Spot gold hits 3-month high of $1,244.67
    * SPDR Gold holdings up for fifth straight session

 (Updates prices; adds comment, second byline)
    By Marcy Nicholson and Maytaal Angel
    Feb 8 (Reuters) - Gold rose to a three-month peak on
Wednesday, as political risks posed by elections in Europe 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        recovered after falling against the dollar
on political risks, as the single currency gained from
investors' wariness over 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 0.5 percent at $1,239.27 an ounce by
2:45 p.m. EST (1945 GMT), after rising to its highest since Nov.
11 at $1,244.67.
    "This discussion over the (U.S.) immigration ban and the
court fight is leaving investors in a realm of uncertainty which
is also leaving room for them to take on new gold positions or
to reduce their shorts," said Rob Haworth, senior investment
strategist for U.S. Bank Wealth management in Seattle.
    U.S. gold futures         settled up 0.3 percent at
    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
    "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, rose for a fifth straight
session on Tuesday.          
    Spot silver        rose 0.3 percent to $17.76 an ounce,
after marking its highest since Nov. 11 at $17.87.
    Platinum        rose 1.2 percent to $1,012.24, after
touching its highest since Nov. 9 at $1,019.20.
    Upside potential for platinum is limited due to an envisaged
decline in investment demand from Japan, Commerzbank said in a
report. "Platinum should be lent buoyancy primarily by the rise
in the gold price that we are forecasting," it said
    Palladium        rose 1.1 percent to $768.70.

 (Additional reporting by Nallur Sethuraman; Editing by Keith
Weir and Diane Craft)
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