Gold rose to its highest in over one a month on Tuesday, buoyed by a weaker US dollar and as fears that Britain will not have a clean break with the European Union stoked safe-haven buying. Spot gold was up half a percent at $1,187.01 an ounce by 0620 GMT, after reaching its highest since December 5 at $1,187.61 earlier in the session. US gold futures climbed 0.2 percent to $1,187.20 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.
Gold is highly sensitive to rising US 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 101.66 on Tuesday. "With volumes currently soft and market positioning lightened, gold should continue to push higher and test a move back above $1,200 over the short term," said MKS PAMP Group trader Sam Laughlin.
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