LONDON (Jan 17): Gold jumped more than 1% to its highest in nearly eight weeks on Tuesday, as excerpts of a speech to be given later by Britain's prime minister pointed to a definitive exit from the European Union.
Safe-haven assets such as gold, the Japanese yen and US Treasuries benefited as investors sought refuge from the uncertainty of what a "hard Brexit" would mean for global markets.
Spot gold rose 1.1% to US$1,216.11 per ounce by 1054 GMT, near highs last seen on Nov 23.
US gold futures were up 1.3% at US$1,211.80 per ounce. The dollar, against a basket of major currencies, fell 0.3%.
"It's the uncertainty on Brexit that has created the risk-off environment which has benefited gold," said Societe Generale Head of Metals Research Robin Bhar.
"No one knows what it really means coming out of the single market, the customs union and allowing free movement. These are factors whose impact we are not going to see for some time."
Gold is often seen as an alternative investment during times of geopolitical and financial uncertainty while riskier assets such as stocks are hit.
According to a speech setting out Prime Minister May's Brexit prioritries, Britain will not seek an exit deal that leaves it "half in, half out" of the European Union.
The dollar slid after comments by President-elect Donald Trump that the greenback was "too strong" and on prevailing uncertainty on his plans for the US economy after his inauguration on Friday.
Trump's campaign calls for tax cuts and more infrastructure spending have boosted US shares and the dollar, as well as driving a selloff in Treasuries, but his protectionist statements and a flurry of off-the-cuff Tweets have kept many investors from adding to risky positions, instead opting for gold.
Investor interest in gold was indicated as holdings of the largest physically-backed ETF, New York's SPDR Trust, on Friday rose for the first time since Nov. 9, the day after Trump's election victory.
Credit Suisse said in a note it remained "constructive" on gold prices, forecasting an average of US$1,338/oz in 2017.
Spot silver was up 1.7% at US$17.05 an ounce, to its highest level since Dec. 14. Platinum scaled two-month highs, climbing 0.8% to US$988.49.
Palladium added 0.9% at US$750.38.