By Maytaal Angel
REUTERS - Gold steadied on Wednesday after hitting a five-month peak as a respite in disquieting political news took the edge off investors' appetite for safe havens even as the mood remained edgy.
Tarnishing an otherwise brightening outlook for global growth, tensions continued to boil in the Korean peninsula and the Middle East, while the upcoming French presidential election also worried investors.
Spot gold was mostly unchanged at $1,273.51 per ounce by 1016 GMT. It hit its strongest since Nov. 10 at $1,279.80, extending the previous session's near 2 percent gains.
U.S. gold futures rose 0.1 percent to $1,275.60.
"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 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 toward the western Pacific.
Meanwhile, the United States accused Russia on Tuesday of trying to shield Syria's leader from blame for a deadly poison gas attack last week.
In France's presidential race, centrist Emmanuel Macron and far-right leader Marine Le Pen have clung on as frontrunners, but a far-left veteran has now 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.
"The safe-haven effect is clearly in play once again ahead of the Easter holiday with volumes in both spot and options well above average," he said.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund (ETF), rose 0.50 percent to 842.41 tonnes on Tuesday. The ETF has seen about six tonnes of inflows this week.
Spot silver dipped 0.1 percent to $18.30 an ounce.
Platinum fell 0.7 percent to $960.50 per ounce after rising over 3 percent in the previous session, while palladium dropped 0.9 percent to $794.03.
(Additioanl reporting by Nallur Sethuraman in Bengaluru; editing by Susan Thomas)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)