Gold on Tuesday hovered near a 5-week peak hit the session before, buoyed by a weaker U.S. dollar and as fears that Britain will not have a clean break with the European Union stoked safe-haven buying. Spot gold was up 0.3 percent at $1,184.56 an ounce by 0249 GMT. On Monday, it touched its highest since Dec. 5 at $1,185.80. U.S. gold futures were steady at $1,184.60 per ounce. "The comments on the UK around Brexit that impacted the pound saw some safe-haven buying," said ANZ analyst Daniel Hynes. The pound slid on Tuesday after weekend comments from British Prime Minister Theresa May sparked talk that Britain would drastically rework trade relations with the EU after Brexit. Hynes added that gold was also getting support from strong physical buying in China ahead of the Lunar New Year later this month, although he said the longer term price outlook would likely be tepid. "The precious metal has got plenty of headwinds in the medium-term. We are not expecting to see any particular upside to the rally we have seen in the past weeks. The outlook for rate hikes in the U.S. will be the biggest driver of gold prices in 2017," Hynes added. Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding the non-yielding asset while boosting the dollar, in which it is priced. The dollar index, which measures the greenback against a basket of currencies, was down 0.3 percent at 101.64 on Tuesday. Focus is turning towards a news conference on Wednesday when U.S. President-elect Donald Trump may give more details on policies that could be implemented after he takes office on Jan. 20. "As Trump's inauguration date nears, we suspect gold investors will monitor political developments more closely. Any significant ratcheting higher in geopolitical tensions could help trigger safe-haven bullion demand," HSBC analyst James Steel wrote in a note. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.06 percent to 805.00 tonnes on Monday. The holdings have dropped about 15 percent since the November U.S. Presidential elections. Silver was up 0.4 percent at $16.62 an ounce and platinum was 0.3-percent higher at $977.10. Palladium eased 0.2 percent at $756.80 an ounce after rising to its highest in more than a month on Monday. Source: Reuters
