Gold price rises as Trump policy triggers safe-haven demand

New York (Jan 31)  Gold prices hit their highest in about a week on Tuesday, buoyed by safe-haven demand after U.S. President Donald Trump rattled global markets with his tough stance on immigration.

A weaker dollar also supported bullion, while traders were turning their attention to a two-day meeting of the U.S. Federal
Reserve starting later in the day for clues on the outlook for U.S. interest rates.

Spot gold had risen 0.51 percent, to $1,201.07 per ounce at 0752 GMT. It earlier touched its highest since Jan. 25 at $1,203.

U.S. gold futures climbed 0.53 percent, to $1,200.1. The dollar index, which measures the greenback
against a basket of currencies, was down 0.1 percent at 100.380.
    Asian shares were on the defensive on Tuesday as stringent
curbs on travel to the United States ordered by Trump brought
home to investors that he is serious about putting his radical
campaign pledges into action.
    "There could be some growth challenges if the ban is
prolonged. So the current risk aversion (driving gold markets)
comes as no surprise," said OCBC analyst Barnabas Gan.
    Trump also fired top federal government lawyer Sally Yates
after she refused to defend the new travel restrictions.
 
    "The announcement (on Sally Yates) provided the impetus for
gold to break through USD $1,200," MKS PAMP Group trader Sam
Laughlin said in a note.
    "Continued uncertainty surrounding the Trump administration
is likely to support the yellow metal over the short term as
global equities remain under pressure." 
     Spot gold may edge up to $1,205 per ounce, as it has
pierced resistance at $1,197, according to Reuters technical
analyst Wang Tao.
    "To go higher, gold needs constant injections from political
uncertainty or increases in geopolitical tensions. And while it
seems to be getting just such support recently, without a near
constant diet of investor unease gold can quickly ease back,"
HSBC analyst James Steel said in a note.
    Traders were also eyeing a meeting of the U.S. Fed on
Tuesday and Wednesday. The Fed has signaled as many as three
rate rises in 2017.
    "Market sentiment is for the Fed to stay pat in the upcoming
meeting," Gan said.
    Higher rates could mean a stronger U.S. currency, which
makes dollar-denominated gold more expensive for holders of
other currencies, potentially dampening demand.
    Meanwhile, spot silver was up 0.47 percent, to $17.19
per ounce, while platinum edged up 0.33 percent, to
$988.49 per ounce.
    Palladium rose 0.5 percent, to $743.72 per ounce.

Source: Reuters