Investing.com – Gold prices gained on Wednesday amid political turmoil in Italy.
Gold futures for June delivery on the Comex division of the New York Mercantile Exchange was up $1.5, or 0.12%, to $1,299.9 a troy ounce by 7PM ET (23:00 GMT).
Investors fear another Italian election, which looks likely to take place as soon as August, might serve as a de facto referendum on the country’s membership in the European Union.
Gold, seen as a safe haven, often gains from political turmoil.
Meanwhile, the events in Italy also sent the dollar to a 10-month high versus the euro.
The U.S. dollar index that tracks the greenback against a basket of six major currencies last stood at 94.81, up 0.48%. The dollar index climbed to this year’s high at 94.43 on Monday after news emerged that the U.S.-North Korea summit is now back on track.
Dollar-denominated assets such as gold are sensitive to moves in the dollar – a gain in the dollar makes gold more expensive for holders of foreign currency and thus decreases demand for the precious metal.
Investors’ attention are likely to turn to the U.S. inflation data due later this week for clues about future interest rate increases, as higher U.S. interest rates make non-yielding gold less attractive.
“Although risk aversion has the ability to support gold in the short term, an appreciating dollar and expectations of higher U.S. interest rates are likely to continue weighing heavily on the yellow metal in the medium to longer term,” said Lukman Otunuga, research analyst at FXTM.