Gold rose to a two-week high on Wednesday as political turmoil in the United States reduced expectations of aggressive interest rate rises this year, pushed down US bond yields and drove the dollar to its lowest in six months. Lower yields reduce the opportunity cost of holding non-yielding gold, while a weaker dollar makes bullion cheaper for non-US investors. Higher interest rates would push yields up and likely boost the dollar.
Spot gold rose for a fifth day and was up 1.8 percent at $1,258.28 an ounce by 2:40 pm EDT (1840 GMT), after hitting $1.260.20, the highest since May 1. It was on track for its biggest one-day gain since June 2016. US gold futures settled up 1.8 percent at $1,258.70.
"Downward movement in yields and the dollar have given support to gold," ABN Amro analyst Georgette Boele said. "And on top of this you get political uncertainty which is denting the dollar." US President Donald Trump is under pressure to explain whether he tried to interfere with a federal investigation after reports that he asked then-FBI Director James Comey to end a probe into Trump's former national security adviser, Michael Flynn.
Silver was up 0.6 percent at $16.92 an ounce and platinum was 0.7 percent higher at $944 an ounce. Palladium was down 2.2 percent at $776.22.