Gold. Picture: REUTERS
Gold. Picture: REUTERS

Bengaluru — Gold held near a three-week peak on Wednesday as an impeachment inquiry into US President Donald Trump raised political uncertainty in the world's largest economy, triggering a broader sell-off in equity markets.

Deficit-hit palladium, meanwhile, continued its record run to a record high.

Spot gold was at $1,530.10/oz at 11.27am GMT, little changed from the previous day, when it hit its highest since September 5 at $1,535.60/oz.

US gold futures eased 0.2% to $1,537.30/oz.

On Tuesday, Democrats in the US House of Representatives launched a formal impeachment inquiry into Trump, alleging he sought foreign help to smear Democratic rival Joe Biden ahead of the 2020 US general election.

“Gold is holding on to the gains from yesterday because of announcements that seem to have hit the dollar and risk appetite," Oanda senior market analyst Craig Erlam said. "[That] is almost perfect for gold."

The impeachment threat increased the prospects of prolonged political uncertainty, driving investors out of assets seen as riskier, with world stocks falling to a two-week low.

Gold is considered a safe store of value during times of political and financial uncertainty.

The impeachment-inquiry push and disappointing US economic data rattled Wall Street on Tuesday, with the S&P 500 posting its biggest daily decline in a month.

Meanwhile, the dollar rose, recovering overnight losses and stemming bullion's advance.

On the trade front, Trump delivered a stinging rebuke to China's trade practices in a speech on Tuesday, saying he would not accept a “bad deal" in US-China negotiations.

“In the short term, economic and geopolitical uncertainty is likely to keep gold prices supported, and possibly even lift them to $1,600/oz," OCBC analysts said in a note.

From a technical viewpoint, spot gold may rise to $1,546/oz as it has cleared a resistance at $1,524, according to Reuters technical analyst Wang Tao.

Among other precious metals, palladium dipped 0.3% to $1,668.30/oz, after hitting a record peak of $1,676.53 earlier in the session.

The metal has rallied more than 20%, or nearly $300, since touching a near two-month low in early August, driven by a sustained supply deficit for the autocatalyst metal.

Silver edged 0.1% lower to $18.56/oz, while platinum gained 0.1% to $954.21/oz.