Investing.com - Gold prices added to overnight gains in North American trade on Wednesday, touching the highest level in two weeks as markets become increasingly worried about political turmoil involving U.S. President Donald Trump.
Comex gold futures rose around $10.00, or about 0.8%, to $1,246.42 a troy ounce by 7:15AM ET (11:15GMT). Meanwhile, spot gold was at $1,246.64. Prices of the yellow metal jumped to an overnight peak of $1,248.90, the most since May 3.
Gold notched a fifth-straight winning session on Tuesday as the dollar sank to a six-month low amid signs of slowing economic activity in the U.S.
Markets were unnerved after media reports said President Trump asked then-FBI Director James Comey to end a probe into Michael Flynn, his former National Security Advisor, relating to alleged ties with Russia.
The news came one day after a report accused Trump of disclosing sensitive intelligence obtained from a close U.S. ally with Russia's foreign minister about an Islamic State operation.
The reports added to concerns that the president will be unable to successfully push through his economic stimulus program in the face of mounting controversies.
The news dampened demand for risk-sensitive assets, such as global equities, and sparked a rally in assets perceived as safe, such as the yen, bullion and U.S. Treasuries, which are often used as a hedge in times of political uncertainty.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, weakened for a sixth straight day, falling around 0.3% to 97.82 in New York morning trade.
It slid to an overnight low of 97.76, levels last seen in the immediate aftermath of Trump's surprise victory in November.
Besides political developments, traders are mulling over a string of weaker than expected U.S. economic reports in recent days, which saw them scale back expectations for more rate hikes by the Federal Reserve this year.
Odds for a June rate hike dropped to around 64%, according to Investing.com’s Fed Rate Monitor Tool, down from more than 80% a week ago, while odds for a second rate hike by December fell to 37% from around 65%.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Also on the Comex, silver futures gained 18.6 cents, or about 1.1%, to a two-week high of $16.92 a troy ounce.
Elsewhere in metals trading, platinum tacked on 0.5% to $941.95, while palladium dipped 0.6% to $787.15 an ounce.
Copper futures dipped 0.7 cents to $2.543 a pound.