Gold rose to the highest level since early July as investors braced for a stormy period in US-China relations with House Speaker Nancy Pelosi heading for Taiwan.
The precious metal often benefits from bouts of geopolitical turbulence, and the Pelosi trip only adds to tailwinds that have helped gold rebound from a 15-month low. A reversal in the dollar’s rally and growing fears about the global economy have also aided bullion prices.
Pelosi is expected to arrive later Tuesday in Taiwan, which China views as its territory. She would be the most senior US politician to visit the island in a quarter of a century, and Beijing has warned of consequences including military action if the trip goes ahead.
“Dollar weakness is aiding gold’s move higher with some support seen from the rising US-China tensions,” said Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services. “However, gold is flashing overbought on at least one technical indicator and may face profit-taking pressure after rising to multi-week highs.”
Spot gold rose as much as 0.5% to $1 780.53 an ounce before trading at $1 773.65 by 6:19 a.m in London. Palladium and silver dropped, while platinum was little changed.
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