Gold rose to its highest in six months on Wednesday as worries over U.S. political uncertainty, aggravated by a partial government shutdown, and slowing global economic growth drove investors towards the safe-haven metal.
Spot gold climbed 0.3 percent to $1,272 per ounce as at 1212 GMT.
It touched $1,274.68 in early trade, its highest since June 20. U.S. gold futures, meanwhile, were up 0.3 percent at $1,275.20 per ounce.
“There is some safe haven buying at this point in time because of the partial (U.S. government) shutdown. The dollar against the Japanese yen and Swiss franc has lost quite a bit of value,” said Afshin Nabavi, Senior Vice President, MKS SA.
Investors were unnerved by the partial U.S. federal government shutdown and President Donald Trump’s hostile stance towards the Federal Reserve chairman.
The U.S. Senate has been unable to break a deadlock over Trump’s demand for more funds for a wall on the border with Mexico, and a senior official said the shutdown could continue until Jan. 3.
With geopolitical uncertainty, investor interest in gold could push prices up to as much as $1,280-$1,300 in the coming year, Nabavi said.
Spot gold is up about 4.1 percent for the month thus far, putting it on track to register its best December in about 10 years.
Interest in gold, which is seen as a hedge against political and economic worries, has reflected in holdings of SPDR Gold, the largest gold exchange-traded fund. SPDR holdings are at their highest point since August and have risen about 6 percent since touching more than 2-1/2-year lows in October.
Gold prices are testing the key resistance at $1,274.60, and breaching this level will push the price towards $1,286.70 on the near term basis, Mumbai-based Kedia Commodities said in a research note.
Markets in Britain, Germany and France remained closed on Wednesday for the Boxing Day holiday.
Among other metals, silver gained 0.6 percent to $14.82 per ounce, while platinum was up 1.6 percent at $795.20. Palladium was up 0.7 percent to $1,255.24 per ounce.
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