"You continue to see the political uncertainty continue to support gold," said ETF Securities analyst Martin Arnold, citing the dismissal of the Federal Bureau of Investigation's (FBI) James Comey and the upcoming British election as sources of uncertainty.
US President Donald Trump on Thursday ran into resistance for calling ousted Federal Bureau of Investigation chief Comey a "showboat". The attack was swiftly rebuffed by top US senators and acting FBI Director Andrew McCabe, who pledged that an investigation into possible Trump campaign ties to Russia would proceed.
But capping gains in gold are expectations that the US Federal Reserve will increase interest rates in June. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. Traders are expecting a 100 percent probability of an interest rate increase in June, CME Group's FedWatch showed. "After the recent drop, we perceive gold as looking technically stretched, negative momentum indicators are beginning to fade and a June Fed rate hike seems largely expected," said Giovanni Staunovo, analyst for UBS Chief Investment Office.
World stock markets paused near record highs after underwhelming US retail sales data and worries over China's banking system spurred investors to lock in recent profits and pushed US Treasury yields and the dollar lower. "Gold has found technical support from a rising trend line," said Fawad Razaqzada, technical analyst for Forex.com. Among other precious metals, silver rose 0.7 percent to $16.41 while platinum eased 0.1 percent lower to $913.65, both set for their first weekly rise in four. Palladium rose 0.2 percent to $803.
Copyright Reuters, 2017