Gold touched its highest in nearly two weeks on Tuesday, supported by a softer dollar and geopolitical tensions in Spain and North Korea, though gains were capped by expectations of another U.S. interest rate increase.
Investors were particularly wary on Tuesday as Pyongyang celebrated the founding of its ruling party, a day after Russia and China both called for restraint on North Korea following a Twitter post from U.S. President Donald Trump hinting that military action was on his mind.
In Spain, the leader of Catalonia's government called for a reduction in tensions in its standoff with Madrid over a bid in the wealthy northeastern region for independence.
The dollar index fell, Wall Street stock indexes scaled new records and U.S. Treasury yields dropped.
"The Fed is going to raise rates, so we see gold breaking out of the (current) range down to the $1,250 level, with geopolitical tensions supporting the downside," said Societe Generale analyst Robin Bhar.
Spot gold was up 0.5 percent at $1,289.81 an ounce, having touched its highest since late September at $1,294.25.
U.S. gold futures for December delivery settled up 0.7 percent at $1,293.80.
"The only news holding down the price of course are the impending rate hikes from the Federal Reserve but if these political issues grow much worse you can bet that $1,300 will not be the top," said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York, referring to concerns about Spain and North Korea.