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Gold hovers near five-week low; political tensions support

Reuters  |  BENGALURU 

By Nithin ThomasPrasad

(Reuters) - Gold inched higher on Tuesday, supported by political uncertainties, after touching a five-week low earlier in the session as a key U.S. Federal Reserve official reaffirmed the central bank's hawkish stance on hikes.

Risk aversion due to Brexit, concerns over U.S. President Donald Trump's ability to carry out financial reforms, election results in Europe and Middle East turmoil have provided some support for gold, said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

"We can see things are getting more complicated and investors have to take some time to put things into context," To said.

Spot gold was up 0.3 percent at $1,246.82 per ounce, as of 0809 GMT. U.S. gold futures rose 0.1 percent to $1,247.8 per ounce.

Spot prices touched a low of $1,242.61 an ounce early in the session, the weakest since May 17, after New York Fed President William Dudley reinforced that recent weak data is unlikely to derail plans to keep raising interest rates.

Gold is used as an alternative investment during times of political and financial uncertainty.

British and EU Brexit negotiators agreed how to organize talks on Britain's divorce at a first meeting in Brussels on Monday, where both sides stressed goodwill but also the huge complexity and tight deadline.

Late Monday, Chicago Fed President Charles Evans said it may be worthwhile for the U.S. central to wait until year-end to decide whether to raise rates again and that it should move slowly to raise them and trim its massive bond portfolio.

"Mixed U.S dollar trade provided some respite for gold during Asian trade on Tuesday, with modest physical interest out of the region evident underneath $1,250, however, not to the extent we expected we would see," MKS PAMP trader Sam Laughlin said in a note.

The dollar index was last unchanged at 97.551 against a basket of currencies.

Spot gold may break a resistance at $1,248 per ounce and rise towards the next resistance at $1,251, as it failed to break a support at $1,243, according to technical analyst Wang Tao.

After having broken through the 100-day moving average, the 200-day moving average could be the next significant support for gold, said OANDA analyst Jeffrey Halley.

"A daily close below here suggests we could target the May lows."

Among other metals, spot palladium climbed 0.5 percent to $864.50 per ounce, and platinum gained 0.6 percent to $927.60 per ounce.

Silver edged up 0.8 percent to $16.58 per ounce. In the previous session, it touched $16.44, its weakest since May 18.

(Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by Richard Pullin and Sherry Jacob-Phillips)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)