April 12, 2017 / 1:15 PM / a year ago

PRECIOUS-Gold steadies after hitting 5-mth peak as political tensions simmer

    * SPDR Gold holdings rise by about 6 tonnes this week

 (Recasts, updates prices)
    By Maytaal Angel
    April 12 (Reuters) - Gold steadied on Wednesday after
hitting a five-month peak as  political tensions simmered,
leaving investor interest in safe havens like the precious metal
largely in tact. 
    Tarnishing an otherwise brightening outlook for global
growth, tensions continued to boil in the Korean peninsula and
the Middle East, while worries over the upcoming French
presidential election persisted.
    Spot gold        was mostly unchanged at $1,274.85 per ounce
by 1249 GMT. It hit its strongest since Nov. 10 at $1,279.80
earlier, extending the previous session's near 2 percent gains. 
    U.S. gold futures         rose 0.2 percent to $1,277.
    "The short term geopolitical impact will likely fade but
(gold) was oversold on expectations of rate hikes and the
reality of muted rate hikes sets up the potential for (further)
upside," said Hamza Khan, head of commodities strategy at ING.
    Gold tends to gain when rate hike expectations recede
because lower rates reduce the opportunity cost of holding
non-yielding bullion. 
    The dollar        was flat versus a currency basket after
falling on Tuesday, though a general risk-off mood that has
prompted investors to sell the greenback prevailed.       
    Chinese President Xi Jinping on Wednesday stressed the need
for a peaceful solution for the Korean peninsula on a call with
U.S President Donald Trump.             
    On Tuesday North Korea warned of a nuclear attack on the
United States at any sign of American aggression, as a U.S. Navy
strike group steamed towards the western Pacific.              
    Elsewhere, Vladimir Putin said on Wednesday trust had eroded
between the United States and Russia, as Moscow delivered an
unusually hostile reception to U.S. Secretary of State Rex
Tillerson in a face-off over Syria.             
    In France's presidential race, centrist Emmanuel Macron and
far-right leader Marine Le Pen clung on as frontrunners, but a
far-left veteran has surged into the top four, pushing some
pollsters to calculate the most extreme run-off scenarios.
    Gold could resume its rise ahead of the Easter long-weekend,
Jeffrey Halley, senior market analyst at OANDA, said.
    "Gold has finally broken and closed above its 200-day moving
average at $1,257.50, which now becomes a support. From a
technical perspective, the way is now clear for a run at $1,300
and possibly higher," Halley said.
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, rose 0.50 percent to 842.41
tonnes on Tuesday. The ETF has seen about six tonnes of inflows
this week.
    Spot silver        was unchanged at $18.30 an ounce.
    Platinum        fell 0.4 percent to $963.50 after rising
over 3 percent in the previous session, while palladium       
dropped 1.1 percent to $793.20.

 (Additioanl reporting by Nallur Sethuraman in Bengaluru;
Editing by Susan Thomas)
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