* Spot gold may retest resistance at $1,238/oz -technicals
* Palladium little changed after marking all-time high on Tuesday
* Markets eye British PM Theresa May’s address to lawmakers (Updates prices, adds UBS quote)
By Eileen Soreng
BENGALURU, Oct 24 (Reuters) - Gold prices inched up on Wednesday after hitting their highest in over three months in the previous session, as global political and economic uncertainties underpinned safe-haven support for the metal.
Spot gold was up 0.1 percent at $1,230.96 an ounce at 0751 GMT. On Tuesday, it touched its highest since July 17 at $1,239.68.
U.S. gold futures were down 0.2 percent at $1,233.90 an ounce.
“Gold has benefited from general equity weakness, short covering, and rising risk aversion ... There is potential for further upside amid rising risk aversion and geopolitical risk,” said John Sharma, an economist with National Australia Bank (NAB).
Global stocks have suffered this week on worries about U.S. earnings, Italian government finances, trade tensions and mounting pressure on Saudi Arabia over the death of dissident journalist Jamal Khashoggi.
Meanwhile, markets awaited British Prime Minister Theresa May’s key address to Conservative Party lawmakers in parliament due later on Wednesday, as she seeks to calm growing tensions over her Brexit strategy.
Dollar denominated gold is used as an alternative investment during times of political and financial uncertainty.
“Weakness in U.S. equities will neutralize the (safe) haven appeal for U.S. dollar, playing into gold’s hands,” said Stephen Innes, APAC trading head at OANDA in Singapore.
“Risk aversion is in play. The difference this time around is the U.S. dollar does not have a go-to haven appeal it had from escalating trade war tension.”
While the dollar is also considered a safe haven currency, weakness in U.S. equities has tended to undercut its appeal especially as talk of a peak in U.S. corporate earnings has raised concerns about the outlook for economic growth.
The bullion has slipped nearly 10 percent from its April peak after investors preferred the dollar as the U.S.-China trade war unfolded against a background of higher U.S. interest rates.
“At this stage, the Fed will be monitoring factors such as the U.S. labour market and inflationary pressures. However, stock market weakness and possible yield curve inversion might induce some caution,” NAB’s Sharma said.
Spot gold may retest a resistance at $1,238 per ounce, a break above which could lead to a gain into the range of $1,252-$1,263, according to Reuters technical analyst Wang Tao.
Meanwhile, palladium was up 0.1 percent at $1,141.10 per ounce after hitting an all-time high of $1,150.50 in the previous session.
UBS raised its price forecasts for palladium and said “unabated ETF outflows suggest a wider market deficit than we expected.”
“Still, with car sales shrinking in major markets, we wouldn’t chase the price rally, but would look to add exposure in any price pullbacks,” the bank said in a note.
Silver was up 0.2 percent at $14.75 per ounce, while platinum was flat at $830.50. (Reporting by Eileen Soreng and Vijaykumar Vedala in Bengaluru; Editing by Joseph Radford)