By Swati Verma
(Reuters) - Gold rose 1 percent on Tuesday to its highest level in over three months as the dollar weakened and global stock markets tumbled, with rising political and economic uncertainties adding to bullion's appeal.
Palladium soared to a record high, bringing the precious metal to within striking distance of achieving parity with gold and with additional support from expected renewed demand from China's automotive sector.
Spot gold was up 1 percent at $1,233.21 an ounce at 1:47 p.m. EDT (1747 GMT), having earlier touched its highest since July 17 at $1,239.68.
U.S. gold futures rose 0.9 percent to $1,236.10, also helped by positive currency fundamentals as the dollar turned lower. [FRX/]
"It's the selloff in the stock markets today and a weaker dollar which is helping gold prices," said INTL FC Stone analyst Edward Meir.
"The main thing to watch on gold is the turbulence in the equity markets, especially if it is sustained. If you get continued declines like this, gold should pick up," Meir said, adding $1,260 is the next resistance level on the charts.
Wall Street followed a slide in European and Asian stock markets, pressured by disappointing corporate earnings, Saudi Arabia's diplomatic crisis and a dispute over Italy's finances. [MKTS/GLOB]
The European Commission rejected Italy's draft 2019 budget on Tuesday, saying it brazenly broke EU rules on public spending, and asked Rome to submit a new one within three weeks or face disciplinary action.
"The outlook for gold is quite constructive with the metal quite resilient even with a strong dollar," said Tai Wong, head of precious and base metals trading at BMO. "I just don't see anything serious to sell gold here."
Gold prices have gained more than 6 percent after falling in mid-August to $1,159.96 an ounce - their lowest since January 2017.
"We have a whole series of situations in connection with Saudi Arabia and Russia, and trade tensions between U.S. and China, and that has been having a knockdown impact on equities and, in turn, providing support to gold prices," said Capital Economics analyst Ross Strachan.
Holdings at SPDR Gold Trust, the world's largest gold-backed, exchange-traded fund, rose 0.3 percent on Monday to 747.88 tonnes. [GOL/ETF]
Investors consider gold a safe store of value during times of economic and political uncertainty.
Meanwhile, palladium was up 1.8 percent at $1,141.49 an ounce after hitting a record $1,150.50 an ounce - about $100 away from parity with the price of gold.
Used mainly in emissions-reducing autocatalysts for vehicles, palladium has gained some 7 percent so far this year. A combination of factors, from tight supplies and large deficits to resurgent interest from speculative investors, has kept the metal on the boil.
Among other precious metals, silver rose 0.8 percent to $14.72, while platinum was up 1.6 percent at $832.80.
(Reporting by Swati Verma and Arpan Varghese and Nallur Sethuraman in Bengaluru; editing by David Gregorio and G Crosse)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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Updated Date: Oct 24, 2018 01:06:40 IST