Gold rises above $1,400/oz after Israeli missile test
Safe-haven buying lifted the price of gold on Tuesday after an Israeli missile test ahead of a possible U.S. strike on Syria, while investors shrugged off strong U.S. economic data and awaited a non-farm report later in the week.
Bullion was also helped by higher crude oil prices. The positive correlation between gold and oil has risen in the past few sessions as gold is seen as a hedge against oil-led inflationary pressures.
Investors, scrutinising economic data to help predict when the United States is likely to start curbing its economic stimulus, nevertheless shrugged off stronger-than-expected figures on U.S. manufacturing showing the pace of growth last month was the fastest in more than two years.
The focus is on non-farm payrolls data, due on Friday.
"The biggest story is certainly the non-farm payrolls data at the end of the week, where a strong number will certainly weigh on gold, as this will give more clues about the timing of tapering," Mitsubishi analyst Jonathan Butler said.
Scaling-back on U.S. monetary stimulus would hit gold, which has been boosted by Fed liquidity for the past four years.
Gold rose to a 3-1/2 month high of $1,433.31 an ounce last week, when a U.S. strike on Syria seemed imminent, and retreated after President Barack Obama decided to seek congressional approval with a vote over the weekend.
"We are again seeing some safe-haven buying related to geopolitical concerns after the Israeli missile news but the long-term story is still the macro economic situation and gold's role as a hedge against that uncertainty," Butler said.
On Tuesday, spot gold, lower initially, rose 0.8 percent to $1,405.06 an ounce by 1532 GMT, while U.S. gold futures for December gained $9.00 to $1,405.00.
In South Africa, the National Union of Mineworkers, which represents about two-thirds of more than 120,000 gold miners there, is starting strike for higher pay later on Tuesday, although President Jacob Zuma appealed to unions to avoid it.
The shutdown could cost South Africa more than $35 million a day, but the impact on gold prices seems muted for now.
"At least psychologically, the forthcoming strikes in the South African gold mining industry - announced for today by the biggest union of mine workers - should also be lending some support," Commerzbank said in note to clients.
Silver was up 1 percent to $24.36 an ounce. Spot platinum rose 1.1 percent to $1,530.29 an ounce, while spot palladium gained 0.8 percent at $718.50 an ounce. (Editing by Louise Ireland)
