February 6, 2017 / 11:24 AM / in 2 years

PRECIOUS-Gold hits highest since November, politics and dollar boost

* European and U.S. politics dominate gold sentiment
    * Upside resistance for gold at $1,250
    * Weak physical demand limits upside for now
    * Platinum at 3-month high

 (Updates prices; adds comment, second byline, datelines)
    By Marcy Nicholson and Pratima Desai
    NEW YORK/LONDON, Feb 6 (Reuters) - Gold jumped 1 percent on
Monday to its highest in nearly three months as worries about
the political landscape in the United States and Europe, and a
subdued dollar, reinforced investor interest.
    Spot gold was up 1.1 percent at $1,233.01 an ounce by
3:02 p.m. EST (2002 GMT), after touching $1,233.80 -- a level
last reached on Nov. 11. U.S. gold futures settled up
0.9 percent at $1,232.10.
    Political uncertainty in the United States has been fueled
by President Donald Trump's policies, the most controversial of
which is a temporary ban on entry by people from seven mostly
Muslim countries. A U.S. judge put a nationwide
block on Trump's order on Friday. 
    "The initial euphoria of the Trump presidency seems to be
fading and the elections in Europe are making people nervous.
The uncertainty does mean upside for prices," said Warren
Patterson, commodities strategist at ING.
    "Since the start of the year we've seen the dollar
consistently weaker, but physical demand from (top consumers)
China and India is still weak and a negative for gold."
    Elections in the Netherlands, France and Germany this year
are also adding to jitters.
    "After several unsuccessful attempts, gold has finally
broken the $1,220 resistance level. While it holds above this
level, the path of least resistance would be to the upside now,"
said Fawad Razaqzada, technical analyst for Forex.com.
    "Consequently, gold could rise towards the next resistance
level at $1,250 next."
    China's net gold imports in December, at 51.51 tonnes, were
down 60 percent from December 2015. 
    Meanwhile, gold demand in India fell 21.2 percent in 2016
from the previous year as new rules dampened demand.
    The dollar's value against a basket of currencies has
fallen more than 3 percent since Jan. 3. 
    That is partly because of expectations that the U.S. central
bank will wait to see what happens on the political and economic
fronts after Friday's monthly jobs report showed wages barely
    "Gold's solid showing so far this year ... is mostly
attributable to a weaker dollar and last week's standoffish
Federal Reserve statement with regard to when it would next move
on rates," INTL FCStone analyst Edward Meir said in a note.
    "Geopolitical concerns will now be magnified by the Trump
administration's more aggressive tone in the foreign policy
arena and trade will also remain a key flash point."
    Spot silver rose 1.5 percent to $17.72 an ounce,
while platinum gained 1 percent at $1,012.80, a
three-month high.
    Palladium added 3.3 percent to $770.75, the highest
since Jan. 25.

 (Editing by Adrian Croft and Chizu Nomiyama)
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