May 19, 2017 / 12:29 PM / 6 months ago

Gold on track for biggest gain in five weeks

LONDON (Reuters) - Gold rose on Friday and was on track for its best week in five as the dollar softened on political turbulence in the United States, boosting bullion’s safe-haven appeal.

1 kg. gold bars are seen on a production line in Ahlatci Metal Refinery in the central Anatolian city of Corum, Turkey, May 11, 2017. REUTERS/Umit Bektas

Spot gold was up 0.5 percent at $1,253.31 per ounce, as of 1151 GMT, putting it up 1.9 percent for the week. U.S. gold futures slipped 0.1 percent to $1,251.60 an ounce.

“Political risk is back on again after market participants became overly complacent following the outcome of the French elections,” Commerzbank analyst Carsten Fritsch said.

“Risk sentiment took a major hit,” he said.

Gold is often seen as an alternative investment during times of geopolitical and financial uncertainty, gaining alongside bond yields and the yen while stocks usually take a hit.

U.S. President Donald Trump last week fired FBI Director James Comey, triggering a political firestorm which culminated on Wednesday in the Justice Department’s appointment of a special counsel to probe possible ties between Russia and Trump’s 2016 presidential campaign.

The dollar index, which measures the greenback against a basket of six major currencies, was headed for its worst week in nine months while world stocks were set for the first weekly fall in five. [USD/][MKTS/GLOB]

New applications for U.S. jobless benefits unexpectedly fell last week and the number of Americans on unemployment rolls tumbled to a 28-1/2-year low, pointing to rapidly shrinking labour market slack.

“Safe-haven buying has provided strong support to gold prices over the past six months,” ANZ said in a note.

“However, rising geopolitical risks in the U.S. and elsewhere are likely to propel prices even higher, despite the spectre of a rate hike in the U.S. next month.”

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.14 percent to 850.71 tonnes on Thursday.

Among other precious metals, palladium gained 0.3 pct to $765.85 per ounce. The metal slipped 5 percent this week and was poised for its biggest weekly fall since late January.

Platinum rose 0.6 pct to $937.39 an ounce while silver climbed 1.5 pct to $16.79 an ounce. Both metals were headed for their strongest week since mid-April.

Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by Elaine Hardcastle and David Evans

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