×

Gold touches one-month high on European political worries

PROSPECTING GOLD
AP

Gold steadied after setting a one-month high on Monday as rising political uncertainty in Europe stoked safe haven demand.

The metal, often seen as an alternative investment during times of geopolitical and financial uncertainty, benefited with the Japanese yen and U.S. Treasuries from a risk-averse mood in global markets.

Spot gold touched a one-month high of $1,270.47 before pulling back 0.27 percent to $1,262.91 per ounce. U.S. gold futures slipped $5.70 to settle at $1,265.70 an ounce as the dollar picked up.

Investors were concerned about next week's election in Britain, as well as the prospect of early elections in Italy and worries over Greek debt, which analysts said supported gold and dented stocks.

A poll in Britain on Tuesday showed Prime Minister Theresa May's lead over the opposition Labour Party dropping to 6 percentage points ahead of the general election next week.

One kilogram gold and silver bars.
Chris Ratcliffe | Bloomberg | Getty Images
One kilogram gold and silver bars.

"Ideally to see a rally in the (stock) markets the UK would want to see Theresa May win by an overwhelming majority which seems to be less likely to happen taking into account the latest polls," said Natixis precious metals analyst Bernard Dahdah.

"If May wins with her current lead it will be slightly negative for her negotiation hand (in Brexit talks) and ... positive for gold."

In Italy, former prime minister Matteo Renzi suggested on Sunday that the country's next election be held at the same time as Germany's, amid mounting speculation that Italians could head to the polls in the autumn.

Germany will vote on Sept. 24, while elections are due in Italy by May 2018. Euro zone finance ministers' failure to agree on Greek debt relief with the International Monetary Fund last week also added to risk aversion.

"The ongoing political uncertainty in the market is really driving safe-haven buying at the moment," said ANZ analyst Daniel Hynes. "Weaker equity markets certainly have played their part, but support from that has been sporadic and we're continuously seeing a strong level of safe-haven demand being the primary driver still."

Political uncertainty in Europe also weighed on world stocks and kept the euro under pressure. China, Hong Kong and Taiwan markets were closed for holidays on Tuesday.

Among other precious metals, silver marked its highest level since April 27 at $17.47 an ounce. It was last up 0.06 percent at $17.38.

Palladium was up 1.15 pct at $806.20 after breaching $800 an ounce on Monday. Platinum was down 1.84 percent at $935.80 an ounce.