Tensions between Russia and Ukraine as well as violence in the Middle East have so far failed to stir up strong demand from investors, although some jewellers started buying bullion after prices dropped below $1,300.
XAUUSD hit a session high at $1,290.80 an ounce and stood at $1,289.30 by 0721 GMT, up $12.96. Prices hit a two-month low of $1,273.06 on Aug. 21 on speculation of an eventual increase in U.S. interest rates.
XAUUSD jumped on speculation that prices near a two-month low will spur purchases as investors assessed tensions around the world. Platinum climbed from an almost four-month low.
Bullion for immediate delivery advanced 1 percent to $1,289.06 at 2:53 p.m. in Singapore. The metal dropped to $1,273.14 on Aug. 21, the lowest level since June 18, on expectations the Federal Reserve may hike rates sooner than expected. The 14-day relative strength index that day fell to a 10-week low of 35.3, near the 30 level that signals to some traders prices may be set to reverse.
Gold is 7.3 percent higher this year as unrest in the Middle East and Ukraine boosted haven demand. Russian President Vladimir Putin is set to meet his Ukrainian counterpart as tensions flare on their border. In the Middle East, the U.S. hasn’t decided whether to attack Islamic State targets inside Syria, Libya called for international help amid growing violence between rival militias, while Israel and the Gaza Strip’s ruling Hamas group showed no sign of backing down.
Data today may show orders for durable goods in July rose at the fastest pace since March 2011 after a Fed measure of economic activity yesterday beat analyst estimates, sending U.S. equity benchmarks to records. The dollar climbed to an 11-month high against the euro as the first rate increase since 2006 is forecast for next year, while the European Central Bank weighs additional measures to support growth.
Fed Chair Janet Yellen said on Aug. 22 at a meeting of central bankers that the U.S. labor market was healing. At the same gathering, ECB President Mario Draghi said a faltering euro-area economy might need more monetary stimulus. The Fed has cut monthly bond buying at each of the last six meetings, while borrowing costs have been near zero since December 2008.
Gold for December delivery added 0.8 percent to $1,289.70 an ounce on the Comex in New York. The net-long position in gold declined 13 percent to 116,916 futures and options contracts as of Aug. 19, U.S. Commodity Futures Trading Commission data show.
XAGUSD for immediate delivery climbed 1 percent to $19.5446 an ounce. Spot platinum advanced 0.6 percent to $1,425.80 an ounce after earlier dropping to $1,413.50, the lowest since May 1. Palladium decreased 0.2 percent to $888.85 an ounce, halting three days of gains.