Gold prices crept higher on Tuesday as the dollar weakened and as investors awaited potential US action against the suspected use of chemical weapons in Syria.
“Geopolitics is taking the main driving seat this week, so gold has potentially got some room for the upside,” said Jonathan Butler, commodities analyst at Mitsubishi in London.
“A lot will hinge on what is happening geopolitically between Russia, Syria, Iran and all sorts of other countries that could be potentially drawn into this.”
Spot gold was up 0.1 per cent at $1,337.16 an ounce at 1250 GMT, having risen to a near one-week high of $1,338.12 earlier in the session.
According to Reuters, US gold futures added 0.03 per cent to $1,340.50 an ounce. If gold breaks through resistance of $1,340, it could move back to the late March highs just under $1,360, Butler added.
Trump on Monday promised quick, forceful action in response to a deadly suspected chemical weapons attack in Syria, appearing to suggest a potential military response.
Gold is often seen as an alternative investment during times of political and financial uncertainty.
Gold also got a boost as the dollar index dipped to a two-week low against a basket of currencies on Tuesday after Chinese President Xi Jinping’s promise to cut import tariffs eased concerns about a trade conflict.
Xi promised to open the country’s economy further and lower import tariffs on products including cars.
His comments spurred a rally in global equity markets. Markets are looking ahead to this week’s Federal Reserve’s minutes on its last policy meeting and US CPI data for cues on the pace of interest rate hikes this year.
In other precious metals, silver gained 0.9 per cent to $16.59 an ounce. Platinum fell 0.3 per cent to $928.74 an ounce, after gaining about 2 per cent in the previous session, the most in nearly two months.
Palladium rose 1.6 per cent to $944 an ounce. The auto catalyst metal gained over 3 per cent on Monday, its biggest daily percentage rise since January 12.
Platinum fell back to a discount to sister metal palladium on Tuesday after rising to a premium last Thursday.
Last September, palladium gained the upper hand over platinum for the first time in 16 years.
“We are not convinced the platinum-palladium ratio can hold consistently above parity this year as strong trends in the auto sector which have weighed on the ratio remain in place,” UBS analyst Joni Teves said in a note.
Diesel vehicles use mostly platinum in catalytic converters while petrol cars largely use palladium, but diesel sales in Europe’s largest car markets have been falling.