(Reuters) - Gold hit a more than one-week high on Monday as buyers hedged against persistent tensions in the Middle East and impeachment proceedings against U.S. President Donald Trump, while deficit-hit palladium’s record run showed no signs of abating.
Spot gold was up 0.2% to $1,559.99 per ounce by 1514 GMT, having earlier touched its highest since Jan. 10 at $1,562.51. U.S. gold futures were little changed at $1,560.20.
“Investors are flocking towards gold in spite of a spike in equity markets, mostly because of long-term uncertainties like political insecurity, probable equity market volatility..., weak earnings expectations and ultra-low interest rates,” Commerzbank analyst Eugen Weinberg said.
Investors are pouring money into gold-backed exchange-traded funds (ETF) and central banks are buying the metal at record rates, Weinberg added.
Holdings of the world’s largest gold-backed ETF, SPDR Gold Trust, rose to 898.82 tonnes on Friday, the highest since Nov. 11.
Investors kept a close eye on developments in the Middle East after a military blockade led to the shutdown of oil facilities in Libya, sending oil prices to a more than one-week high on Monday.
That followed an attack by Iran-aligned Houthis on a military training camp in Yemen on Saturday.
In Washington, President Donald Trump will offer his first comprehensive defence on Monday before his impeachment trial in the Senate.
Bullion largely ignored positive momentum in the dollar and world stocks following a host of robust economic data.
Trading volumes were low with U.S. markets closed for a holiday. Focus is now likely to turn to the U.S. Federal Reserve as it meets for its first policy meeting of the year later this month.
The Fed cut interest rates three times last year before deciding to stand pat.
On the technical front, gold is consolidating above the $1,550 support, ActivTrades chief analyst Carlo Alberto De Casa, said in a note.
A clear break above $1,562 an ounce could set gold up for further gains, with the first target around $1,577, followed by resistance near $1,593 and then the seven-year peak around $1,611, the note added.
Scarce autocatalyst metal palladium was up about 0.1% to $2,482.24 per ounce after earlier hitting a record high of $2,582.19.
“Looking ahead to the next few months, the picture is slightly less pronounced: the forward curve is falling sharply, meaning that market participants expect the (tight supply)situation to ease somewhat,” Commerzbank said in a note.
Silver rose 0.3% to $18.06, while platinum was up about 0.5% to $1,012.55 per ounce.
Reporting by Diptendu Lahiri in Bengaluru; Editing by Kirsten Donovan, Mark Potter and Jan Harvey