Gold bars are displayed at Degussa shop in Singapore. Picture: REUTERS
Gold bars are displayed at Degussa shop in Singapore. Picture: REUTERS

London — Gold prices steadied on Wednesday, supported by safe-haven buying after the sudden dismissal US secretary of state Rex Tillerson but pressured by a recovering dollar. The US dollar inched higher against major currencies after edging lower following the dismissal of Tillerson.

A stronger dollar makes commodities it is priced in more expensive for holders of other currencies.

Spot gold was flat at $1,325.97 per ounce at 11.16am GMT. It touched $1,330.02 an ounce during the session, its highest since March 7.

US gold futures for April delivery fell 0.1% to $1,326.30/oz.

"Currently gold is caught between these negative impacts and sometimes positive impacts are coming from a weaker stock market, US policy and also the frequent shift between risk-on and risk-off by investors," said Quantitative Commodity Research analyst Peter Fertig.

Gold is seen as a safe haven during times of political and financial uncertainty, and benefited on Tuesday when US President Donald Trump fired Tillerson after a series of public rifts over policy, replacing him with loyalist CIA director Mike Pompeo.

Risk aversion is back on the table following the unexpected news of Tillerson’s dismissal and the appointment of Pompeo, said OCBC analyst Barnabas Gan.

"Pompeo is a supporter of Trump’s trade policy and could help advance his agenda of imposing it on US trading partners … all this uncertainty and risk aversion leaves gold as a safe haven option," Gan added.

Meanwhile, data on Tuesday showed US consumer prices cooled in February amid a decline in petrol prices and a moderation in the cost of rental accommodation, the latest indication that an anticipated pick-up in inflation probably will be gradual.

Inflation is a key economic factor the US central bank considers when deciding monetary policy. A strong US inflation reading could raise expectations for future interest rate increases, which would put pressure on nonyielding bullion.

In other precious metals, silver rose 0.2% to $16.58 per ounce.

Platinum hit a one-week high, up 0.8% to $969.40/oz and palladium edged up 1.1% to $1,001.97/oz, touching a near two-week high.