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NEW YORK/LONDON (Reuters) - Gold jumped nearly 2 percent to a fresh five-month high on Tuesday as investors sought assets seen as havens from risk amid mounting political and security concerns over North Korea, the Middle East and the looming French election.
Global tensions escalated as Western countries were joined by Middle Eastern allies in a push to isolate Syrian President Bashar al-Assad following a chemical attack in the country last week.
Spot gold XAU= was up 1.53 percent at $1,273.44 per ounce by 3:10 p.m. EDT (1910 GMT), after hitting a fresh high since Nov. 10 at the session high of $1,275.16.
U.S. gold futures GCcv1 ended the session 1.6 percent higher at $1,274.20.
Uncertainty about the result of the upcoming French presidential election and possible U.S. military strikes against Syria and North Korea also boosted demand for safe-haven assets among jittery investors.
"Geopolitical events (this time concerning North Korea) have seen gold break through $1,260," Metals Focus said in a note.
"Although silver prices also improved, gold was the chief beneficiary of the safe haven buying that emerged."
Investors also bought the Japanese yen and U.S. Treasuries, while the dollar index .DXY fell and stocks took a knock.
Meanwhile, the Federal Reserve plans to raise U.S. interest rates gradually so as to sustain healthy growth without letting the economy overheat, Fed Chair Janet Yellen said on Monday. Rising interest rates lift the opportunity cost of holding non-yielding bullion.
From a technical viewpoint, gold broke above the key chart resistance at its 200-day moving average, fueling more buying.
However, the rally above $1,260 could be hard to sustain "as gold lacks momentum", Jeffrey Halley, senior market analyst at OANDA said.
"A break of $1,240 will prelude a deeper correction," he said.
Holdings of SPDR Gold Trust (GLD), the world's largest gold-backed exchange-traded fund, rose 0.21 percent to 838.26 tonnes on Monday from 836.49 tonnes on Friday.
Spot silver XAG= was up 2.1 percent at $18.294 an ounce after marking its lowest in more than two weeks at $17.71 in the previous session.
However, looking ahead, the prospects for gold and silver demand appear challenging, analysts said.
"Anecdotes of silver scrap being amassed by the trade and, for gold, the persistent discount averaging $15/oz in recent months suggest that many consumers could remain net sellers for at least some time to come," Metals Focus said.
Platinum XPT= rose 2.8 percent to $962.55 an ounce, after hitting its weakest in over three weeks at $931.85 on Monday.
The spread between gold and platinum hit its highest since October 2016 at $318.23.
"There is certainly more geopolitical risk at the moment and that is more positive (for) gold than platinum and there is no surprise in that sense to see the spread widen ... There is generally a downbeat (sentiment) about diesel cars in Europe," a London-based market analyst with a mining company said.
Platinum is used in catalysts in diesel-powered vehicles, which are going out of favour in Europe.
Palladium XPD= rose 2 percent to $804.05 after touching its weakest in more than a week at $784.72 in the previous session.
Additional reporting by Nallur Sethuraman in Bengaluru; Editing by Mark Potter and Tom Brown