Gold rose on Thursday as the dollar weakened after a 10-day winning streak and investors took the opportunity to buy bullion as a hedge against political uncertainty in the United States and Europe. Spot gold rose 0.7 percent to $1,240.86 an ounce by 2:37 pm EST (1937 GMT), and is up about 10 percent from a mid-December low. US gold futures settled up 0.7 percent at $1,241.60.
Concern over US President Donald Trump's policies, as well as elections in the Netherlands, France and Germany this year, have fuelled gold's rise to a peak of $1,244.67 on February 8. But the prospect of a higher dollar and US Treasury yields after US Federal Reserve Chair Janet Yellen said that US interest rates may need to be raised in March pushed gold to $1,216.41 on Wednesday, its lowest since February 3.
"It's a tug of war between a higher probability of a US rate hike in March and upcoming elections around Europe, which are creating uncertainty and demand for safe assets," said Jens Pedersen at Danske Bank. "As I see it, a relatively small group of hedge funds and institutional speculators have been calling the tune for gold, trading the recent range, buying on dips, selling on rallies, and gradually adding to their physical holdings - a behavioural pattern we expect will continue within a rising trading range - at least until a price above the $1,300 an ounce level is well established," said Jeffrey Nichols, senior economic adviser to Rosland Capital.
In other precious metals, palladium was up 0.3 percent, at $791.75 an ounce, after tapping $794.90, its highest since January 24. Silver was up 0.5 percent at $18.07, after reaching a three-month high at 18.13. Platinum was 0.6 percent lower at $1,009.45.