Gold gained on Wednesday en route to snap a three-session losing streak on expectations the US Federal Reserve and other top central banks would adopt a dovish approach to monetary policy, while silver soared to a more than one-year high.
Spot gold was up 0.5pc at $1,424.22 an ounce as of 10:38 a.m. EDT (1438 GMT), but was still short of last week's peak at $1,452.60. US gold futures rose 0.2pc to $1,424.40.
"Much (of the gains in gold) have to do with expectations related to a Fed rate cut. If you get a rate cut, the opportunity cost of holding gold decreases and we will see more inflows into gold," said Natixis analyst Bernard Dahdah.
Investors expect the US central bank to cut its overnight benchmark lending rate at its July 30-31 policy meeting.
Futures remain 100pc priced for a rate cut of 25 basis points from the Fed and imply an 18pc chance of 50 basis points.
Bullion also largely ignored a robust dollar, which held close to a seven week peak against key rivals.
Gold priced in euros gained to hold near a 6-1/2 year high scaled last week, after weak euro zone data kindled expectations for aggressive monetary policy easing by the European Central Bank when it meets on Thursday.
The euro zone purchasing managers' index (PMI), considered a good guide to economic health, dropped to 51.5 this month from 52.2 in June, missing the median expectation in a Reuters poll for 52.1.
Gold gained on some safe-haven bets following the PMI number out of Europe, David Meger, director of metals trading at High Ridge Futures said.
Apart from expectations for dovish central bank policy globally, bullion is also being supported by tensions between the US and Iran and an ongoing trade war, Merger added.
A US Navy ship took defensive action against a second Iranian drone in the Strait of Hormuz last week, but did not see the drone go into the water, the US military said on Tuesday.
Silver gained 1.1pc to $16.58 per ounce. It touched $16.64, earlier this session, its highest level in over an year.
"Silver is living up to its reputation of being volatile ... retail and institutional investors are looking into silver ETFs, indicating it is in demand again," said Quantitative Commodity Research analyst Peter Fertig.
Silver ETFs tracked by Reuters have risen to record levels at 666.2 million ounces.
Platinum rose 2.1pc to $872.06, having touched a near three-month high of $874.38 earlier in the session, while palladium edged up 0.4pc to $1,533.23 per ounce.
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