Gold steadied near three-month highs on Thursday as political risk in Europe and the United States drove demand for bullion as a safe haven. Spot gold was down 0.1 percent at $1,240.31 an ounce at 1312 GMT, having struck its highest since November 11 at $1,244.67 in the previous session. US gold futures gained 0.2 percent to $1,241.70.
Gold has risen 1.7 percent this week as US President Donald Trump has fought to enforce his temporary travel ban on people from seven Muslim-majority countries and as far-right leader Marine Le Pen launched her bid for the French presidency.
Official data on Thursday showed that Germany's trade surplus climbed to a record high in 2016, setting the scene for conflict between Berlin and Washington after Trump's top trade adviser last week accused Berlin of exploiting a "grossly undervalued" euro to gain trading advantage.
Higher political risk in Europe has prompted overseas investors to pile money into US treasuries, driving down yields and reducing the opportunity cost of holding non-yielding bullion.
"We see gold as relatively underpriced, given the rally in commodities and high level of political uncertainty," said Hamza Khan at ING. Khan said that gold could rise as high as $1,350 an ounce before too long, having seen jumps of $10 a day. Adding support to prices, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased its bullion holdings for a sixth day on Wednesday.
The moves higher could run into resistance, said David Govett at Marex Spectron. "It always concerns me when you start to see this sort of buying at the top of a hundred dollar move," he said. "It will need added yield/dollar weakness to sustain the rally."
Platinum was up 0.1 percent at $1,015.75 an ounce. The metal used in jewelery and autocatalysts touched $1,023, its highest since October 3, earlier in the session. ING's Khan said the rally was not backed by fundamentals, but by investors betting on a broad rise in industrial metals and taking advantage of platinum's relative undervalue to gain exposure. Spot silver fell by 0.1 percent to $17.77 an ounce, just off the $17.86 three-month high reached in the previous session. Palladium was up 0.1 percent at $769.
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