Gold rises as Trump policy fuels safe-haven demand

By Arpan Varghese

(Reuters) - Gold prices hit their highest in about a week on Tuesday, buoyed by safe-haven demand after U.S. President Donald Trump rattled global markets with his tough stance on immigration.

A weaker dollar also supported bullion, while traders were turning their attention to a two-day meeting of the U.S. Federal Reserve starting later in the day for clues on the outlook for U.S. interest rates.

Spot gold had risen 0.6 percent to $1,202.08 per ounce by 0520 GMT. It earlier touched its highest since Jan. 25 at $1,203.

U.S. gold futures climbed 0.68 percent to $1,201.1.

The dollar index, which measures the greenback against a basket of currencies, was down 0.1 percent at 100.310.

Asian shares were on the defensive on Tuesday as stringent curbs on travel to the United States ordered by President Donald Trump brought home to investors that he is serious about putting his radical campaign pledges into action.

"There is talk that the ban could affect the tech and energy sectors and this suggests that there could be some growth challenges if the ban is prolonged, so the current risk aversion (driving gold markets) comes as no surprise," said OCBC analyst Barnabas Gan.

The technology sector has become the clearest corporate opponent to the ban. Companies have been considering the best way to muster their resources, with efforts so far including statements condemning the move and financial support for organizations backing immigrants.

Spot gold may edge up to $1,205 per ounce, as it has pierced resistance at $1,197, according to Reuters technical analyst Wang Tao.

"To go higher, gold needs constant injections from political uncertainty or increases in geopolitical tensions. And while it seems to be getting just such support recently, without a near constant diet of investor unease gold can quickly ease back," HSBC analyst James Steel said in a note.

Traders were also eyeing a meeting of the U.S. Fed on Tuesday and Wednesday. The Fed, which raised interest rates in December, has signaled as many as three rate rises in 2017.

"Market sentiment is for the Fed to stay pat in the upcoming meeting," Gan said.

Higher rates could mean a stronger U.S. currency, which makes dollar-denominated gold more expensive for holders of other currencies, potentially dampening demand.

In other precious metals, spot silver was up 0.4 percent at $17.17 per ounce, while platinum edged up 0.6 percent to $990.70.

Palladium rose 0.7 percent to $745.85 per ounce.

(Reporting by Arpan Varghese in Bengaluru; Editing by Richard Pullin and Joseph Radford)