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Gold climbs to 3-1/2 month high amid political worries

Gold coins
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Gold hit its highest in 3-1/2 months on Friday as the dollar hit a one week low after the new
U.S. finance chief poured cold water on the "Trumpflation trade" that had boosted the greenback this year.

Treasury Secretary Steven Mnuchin said on Thursday that any steps U.S. President Donald Trump's administration takes on policy would probably have only limited impact this year, though he wants to see tax reform passed by August.

The comments suggested much work was still needed on the sweeping tax plan that Mnuchin called his main priority, and which investors had bet would stoke growth and inflation this year.

"We've got a vacuum of (U.S. domestic) policy, real (interest) rates going down, the dollar going sideways and geopolitical (jitters) around the world ... all helping gold," ICBC Standard Bank analyst Tom Kendall said. "There is apparently a move of institutional investor money into gold and there are usually very good reasons for that."

Spot gold was up 0.63 percent at $1,257.21 per ounce, after touching its highest since Nov. 11 at $1,258.45 earlier in the session. U.S. gold futures rose $6.90 percent to $1,258.30.

Tempering gains in bullion, a poll on Friday suggested French presidential candidate Emmanuel Macron would beat far-right leader Marine Le Pen, who has promised a referendum on
European Union membership.

Still, the precious metal was supported by tempered expectations of a U.S. rate hike in March after minutes from the Federal Reserve's latest policy meeting struck a less hawkish note than expected.

"Even in the event of a rate increase, we doubt the precious metal will lose much ground ahead of the key presidential elections in France in April, coupled with the Washington gridlock that seems to be calcifying," INTL FCStone analyst Edward Meir said.

Holdings of the largest gold-backed ETF, New York's SPDR Gold Trust, have risen over 5 percent this month on geopolitical risk.

In other precious metals, silver was up 0.99 percent at $18.34 per ounce. Silver has gained about 1.5 percent this week in what could be its ninth straight weekly gain.

Platinum rose 1.59 percent to $1,021.99 per ounce, while palladium fell 0.24 percent to $770.90.