Gold heads for recent peak as global political tension mounts
A weaker dollar is also helping the metal, while palladium is up nearly 1%
Bengaluru — Gold prices edged higher on Monday, heading towards a two-and-a-half-month peak hit last week.
The gains came courtesy of an easing dollar eased and concern that rising political tensions could slow global economic growth.
Spot gold was up 0.2% at $1,228.15 an ounce at 4.24am GMT. On October 15, bullion touched its highest since July 26 at $1,233.26.
US gold futures were up 0.2% at $1,231 an ounce.
"So far we are seeing a good recipe for gold prices to recover. One is global economic slowdown, another is geopolitical uncertainties…. At the same time, there is a risk-off sentiment," said Argonaut Securities analyst Helen Lau.
"If the tensions loom large we could see gold rebound through 1,300."
The outlook for global growth in 2019 has dimmed for the first time, according to Reuters polls of economists, who said the US-China trade war and tightening financial conditions would trigger the next downturn.
Meanwhile, geopolitical concerns including tension between Saudi Arabia and the West over the killing of journalist Jamal Khashoggi, developments related to Brexit, and Italy's budget woes, were keeping investors interested in gold, analysts said.
Gold is seen as a safe store of value during political and economic uncertainty.
"There is an underbelly of concern over heightened geopolitical risks and I think this will keep gold bid," said Stephen Innes, Asia-Pacific trading head at Oanda in Singapore.
"As we move closer to US midterm elections, there is going to be a lot more political upheaval and this is why gold is keeping the bid."
Spot gold may either consolidate further below a resistance at $1,235 an ounce, or break a support at $1,217, to fall to the next support at $1,208, according to Reuters technical analyst Wang Tao.
Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.39% to 745.82 tonnes on Friday.
Gold speculators cut their net short position in Comex gold contracts by 65,637 contracts to 37,372 contracts in the week to October 16, the smallest since late July, data showed.
The dollar index, which measures the greenback against a basket of six major currencies, was down 0.1%.
Among other precious metals, silver was up 0.5% at $14.67 an ounce.
Platinum rose 0.1% to $830.50 an ounce and palladium climbed nearly 1% to $1,090.47 an ounce, closer to the more than eight-month peak of $1,096.80 hit on October 11.