US gold futures climbed early on Wednesday as the dollar touched another record low against the euro and as oil prices remained firm, and analysts expected the precious metal to be supported by heightened geopolitical tensions and the falling greenback.
"It doesn't look like gold is going to sell off to a great extent in the near term, no matter what, because everywhere you look in the world, it's a new minefield geopolitically," said George Gero, vice president at RBC Capital Markets Global Futures.
At 10:31 am EDT (1431 GMT), most-active gold for August delivery on the COMEX division of the New York Mercantile Exchange was up $6.40 at $672.30 an ounce, dealing between $665.20 and $673.70, a six-week high.
Gero also cited labour issues in gold mines, lofty energy prices and a lacklustre dollar for bullion's strength. "People who are concerned about holdings in dollars are diversifying generally into gold," he said.
Data showed that bullion held by StreetTRACKS Gold Shares, the world's largest gold ETF, surged to 487.92 tonnes on Wednesday, from 464.22 tonnes on July 5. James Steel, analyst at HSBC bank, said in a client note the dollar still held the key to gold movements.
"If the US dollar were to resume a descent, gold would be likely to be supported, in our view," Steel said. He said that the topic of further diversification out of the dollar, including the ongoing gradual sale of dollars by reserve managers, was widely discussed in the currency markets.
Spot gold was quoted at $668.20/668.80 an ounce, higher than $664.60/665.40 late Tuesday. The London morning gold fix was $667.75. COMEX September silver was up 4.7 cents at $13.065 an ounce, trading between $12.965 and $13.130. Spot silver was quoted at $12.98/13.02 an ounce, compared with $12.91/12.96 late Tuesday. London silver was fixed at $12.940.
NYMEX October platinum was $6.10 higher at $1,328.70 an ounce. Spot platinum fetched $1,309/1,313 an ounce. September palladium gained $1.70 to $369.45 an ounce. Spot palladium was quoted at $365/368 an ounce.