Gold, silver hit five-month highs

"Geopolitical developments are likely to continue to provide an underlying level of support over the short term, however, the continued failed breaks above the 200-day moving average donot instil confidence in the metal's ability to break higher out of the recent range", MKS PAMP Group trader Sam Laughlin said.

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Wednesday as continued geopolitical tensions between the US and North Korea gave support to the precious metal.

Spot gold was down 0.3 percent at $1,283.30 an ounce by 1410 GMT, having earlier hit its strongest since early November at $1,287.98 an ounce. Visit MarketWatch.com for more information on this news. Bullion is trading at the highest level since the week in November when Trump won the USA election as rising global tensions surrounding Syria and North Korea strain investors' nerves.

Futures on the precious metal jumped 1.6 percent during the regular session, bringing their year-to-date gain to above 10 percent. The dollar was flat versus a currency basket after falling on Tuesday, though a general risk-off mood prevailed.

Investors were shaken after the US President said he thought the dollar was "getting too strong" and that he'd like the Federal Reserve to keep interest rates low in an interview with the Wall Street Journal last night. Rising interest rates lift the opportunity cost of holding non-yielding bullion.

"The further deterioration in the US relationship with Russian Federation and North Korea this week has supported the prices of precious metals", Capital Economics said in a weekly note. "A break of $1240 will prelude a deeper correction". Gold has been failing to break key chart resistance at its 200-day moving average.

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The uncertainty is supporting physical demand for gold, with holdings in SPDR Gold Shares, the largest exchange-traded fund backed by gold, rising 4.2 metric tons to 842.4 tons as of Tuesday.

However, looking ahead, the prospects for gold and silver demand appear challenging, analysts said.

Platinum rose 2.8 per cent to US$962.55 an ounce, after hitting its weakest in over three weeks at US$931.85 on Monday.

Among other precious metals, silver was up 0.1 percent at $18.52 an ounce, after touching a five-month high of $18.599 in the previous session.

The Canadian dollar was trading at 74.95 cents United States, down 0.06 of a cent from Monday. "There is generally a downbeat (sentiment) about diesel cars in Europe", a London-based market analyst with a mining company said.

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