May 30, 2017 / 10:42 AM / a year ago

PRECIOUS-Gold touches one-month high on European political worries

    * Political uncertainty in Europe stokes safe-haven buying
    * Spot gold, silver touch one-month peaks
    * GRAPHIC-2017 asset returns:

 (Updates prices)
    By Zandi Shabalala
    LONDON, May 30 (Reuters) - Gold eased after setting a
one-month high on Tuesday in response to rising political
uncertainty in Europe which spurred increased safe-haven demand.
    The metal, often seen as an alternative investment during
times of political and financial uncertainty, benefited from a
risk-averse mood in global markets along with the Japanese yen
and U.S. Treasuries.
    Spot gold        touched a one-month high of $1,270.47
before pulling back 0.3 percent to $1,262.60 per ounce by 1403
    U.S. gold futures         slipped 0.4 percent to $1,263.30
an ounce as the dollar firmed.
    Investors are concerned about next week's election in
Britain, as well as the prospect of early elections in Italy and
worries over Greek debt, which analysts said supported gold and
dented stocks.            
    A poll in Britain on Tuesday showed Prime Minister Theresa
May's lead over the opposition Labour Party dropping to 6
percentage points ahead of the election on June 8.             
    "Ideally to see a rally in the (stock) markets the UK would
want to see Theresa May win by an overwhelming majority which
seems to be less likely to happen taking into account the latest
polls," Natixis precious metals analyst Bernard Dahdah said.
    "If May wins with her current lead it will be slightly
negative for her negotiation hand (in Brexit talks) and ...
positive for gold."
    In Italy, former prime minister Matteo Renzi suggested on
Sunday that the country's next election be held at the same time
as Germany's. Germany will vote on Sept. 24, while elections are
due in Italy by May 2018.             
    Euro zone finance ministers' failure to agree on Greek debt
relief with the International Monetary Fund last week also added
to risk aversion.             
    "The ongoing political uncertainty in the market is really
driving safe-haven buying at the moment," ANZ analyst Daniel
Hynes said. 
    "Weaker equity markets certainly have played their part, but
support from that has been sporadic and we're continuously
seeing a strong level of safe-haven demand being the primary
driver still." market analyst Fawad Razaqzada said the focus for
bullion this week was U.S. non-farm payrolls due on Friday.
    "I expect the dollar to continue to strengthen this week
until Friday's jobs data release, therefore I think gold is
going to go down from here," Razaqzada said.
    Among other precious metals, silver        marked its
highest level since April 27 at $17.47 an ounce. It was last
flat at at $17.35.
    Palladium        was flat at $797.22 after breaching $800 an
ounce on Monday. Platinum        was down 1.2 percent at $941.24
an ounce.

 (Additional reporting by Nithin ThomasPrasad and Vijaykumar
Vedala in Bengaluru; Editing by Susan Fenton and Jane Merriman)
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