Gold rose to the highest in seven months on Tuesday on a slump in the dollar to a seven-month low and safe-haven demand driven by a rift in the Middle East, an upcoming European Central Bank meeting and the British election. Investors were also drawn to gold, seen as a safe place to park assets, by uncertainty around the testimony to a Senate committee by former FBI Director James Comey.
A weaker dollar makes gold cheaper for holders of other currencies, while lower yields reduce the opportunity cost of holding non-yielding bullion. Weak economic data from the United States has reduced expectations of rapid U.S. interest rate rises this year, but the Federal Reserve is expected to hike rates at its June policy meeting next week.
Spot gold was up 1.1 percent at $1,294.34 an ounce, having earlier touched its highest since Nov. 9 at $1,295.97. U.S. gold futures rose 1.2 percent to settle at $1,297.50.
On physical demand, a decision by major gold consumer India to levy a sales tax on gold at 3 percent rather than the expected 5 percent was supporting bullion prices by spurring demand for physical metal.
On technical front, gold extended gains to top the highs since 2017, with key technical indicators supporting an upward trend. The MACD index showed a strong bullish tone, suggesting retaining steam. Resistance can be found at $1,310-1,320 in the near term. But it shall be noted that a sustained rally could trigger pullback in the near term. The support can be met at around $1,265.
Silver rose 0.9 percent to $17.67 an ounce on Tuesday, hitting the peak since April 25. Compared with gold, the white metal still keeps an arm’s strength to the year-to-end high despite of recent gains, suggesting ample potential for further gains.

 
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