Investing.com - Gold gained in Asia on Monday with investors noting heightened geopolitical tension as Saudi Arabia said at the weekend it would cut diplomatic ties with Iran.
The move followed a weekend storming of the Saudi embassy in Tehran in response to the kingdom's execution of a prominent Shiite cleric.
Gold for February delivery on the Comex division of the New York Mercantile Exchange gained 0.22% to $1,062.50 a troy ounce. Also on the Comex, silver futures rose 0.63% to $13.890 a troy ounce, while copper futures fell 0.14% to $2.132 a pound.
The announcement to cut diplomatic ties was sent in an Arabic-language Twitter (N:TWTR) post by the Saudi Ministry of Foreign Affairs. "His excellency, Foreign Minister Adel al-Jubeir (of the) Saudi kingdom is announcing cutting diplomatic ties with Iran."
China is to publish its Caixin manufacturing index for December ahead with a forecast of 49 - still in contraction, but up from 48.6 previously. Japan also reports its manufacturing index for December.
In Australia, the AIG manufacturing index came in at 51.9, in expansion, but down from 52.5 previously.
In the week ahead, investors will be looking ahead to Friday’s U.S. jobs report for December, as well as reports on U.S. manufacturing and service sector activity. Tuesday’s euro zone inflation report will also be in focus.
On Monday, in the euro zone, Germany is to release preliminary data on consumer inflation.
The U.K. is to release survey data on manufacturing sector activity.
In the U.S., the Institute of Supply Management is to release data on manufacturing activity
Last week, gold futures edged higher on Thursday on the last day of a year which saw the precious metal post its third straight yearly loss as the start of a rate hike cycle by the Federal Reserve bolstered the dollar and pressured the metal.
A key factor in golds losses in 2015 was the belief that the start of a rate hike cycle by the Fed in conjunction with continuing loose monetary policy from the European Central Bank and the Bank of Japan would continue to underpin investor demand for the greenback.
Higher interest rates make the dollar more attractive to yield-seeking investors. A stronger dollar tends to weigh on gold, which is denominated in the U.S. currency and becomes more expensive for many buyers when the dollar rises.
The Fed hiked U.S. interest rates for the first time in almost a decade last month and further rate increases are expected in 2016.