The pound steadied and stocks rose world-wide after earlier weakness in the sterling and European equity markets on fears of a "hard" Brexit after British Prime Minister Theresa May said over the weekend she was not interested in Britain keeping "bits" of its EU membership.
Gold, often seen as an alternative investment during times of political and financial uncertainty, benefited from the risk-averse sentiment in the market. Spot gold hit its highest since Nov. 30 at $1,190.46 an ounce, and was up 0.4 percent at $1,185.36 an ounce by 3:19 p.m. EST (2019 GMT). US gold futures settled up 0.05 percent at $1,185.50.
ABN AMRO commodity strategist Georgette Boele said the combination of a soft dollar, lower US yields and risk aversion created a supportive environment for gold. "We have this Trump conference coming up tomorrow and the market seems to be a bit nervous ahead of it," Boele said, adding that this sentiment would be short-lived as US interest rates are expected to rise, denting gold.
Gold is highly sensitive to rising US rates, which increase the opportunity cost of holding the non-yielding asset while boosting the dollar, in which it is priced. However, ETF Securities analyst Martin Arnold said the dollar had rallied "too far, too fast" and that a pullback was likely which would support gold for a while to come. Strong physical demand from the Chinese new year also buoyed prices, Marex Spectron's head of precious metals David Govett said. He said investors were starting to buy gold "as the great unknown of the Trump presidency looms." Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell on Monday.
Silver was up 1.3 percent at $16.77 an ounce, after rising to $16.90, its highest since Dec. 15. "This year, we expect demand for silver from the photovoltaic sector segment to ease slightly, although the global total will remain comfortably the second highest on record," said Metals Focus in a note, adding that demand from the automobile industry will continue as well. Platinum bucked the trend, slipping 0.2 percent to $972.50, while palladium rose 0.4 percent at $761.45.