By Eileen Soreng
BENGALURU (Reuters) - Gold prices edged higher on Monday towards a 2-1/2-month peak hit last week as the dollar eased and worries over rising political tensions slowing global economic growth lent support to the metal.
Spot gold was up 0.2 percent at $1,228.15 an ounce at 0424 GMT. On Oct. 15, the bullion touched its highest since July 26 at $1,233.26.
U.S. gold futures were up 0.2 percent at $1,231 an ounce.
"So far we are seeing a good recipe for gold prices to recover. One is global economic slowdown, another is geopolitical uncertainties ... At the same time, there is a risk-off sentiment," said Argonaut Securities analyst Helen Lau.
"If the tensions loom large we could see gold rebound through 1,300."
More From This Section
The outlook for global growth in 2019 has dimmed for the first time, according to Reuters polls of economists who said the U.S.-China trade war and tightening financial conditions would trigger the next downturn.
Meanwhile, geo-political concerns including tensions between Saudi Arabia and the West over the killing of journalist Jamal Khashoggi, developments related to Brexit, and Italy's budget woes are keeping investors interested in gold, analysts said.
Gold is seen as a safe store of value during political and economic uncertainty.
"There is an underbelly of concern over heightened geopolitical risks and I think this will keep gold bid," said Stephen Innes, APAC trading head at OANDA in Singapore.
"As we move closer to U.S. mid-term elections, there is going to be a lot more political upheaval and this is why gold is keeping the bid."
Spot gold may either consolidate further below a resistance at $1,235 per ounce, or break a support at $1,217, to fall to the next support at $1,208, according to Reuters technical analyst Wang Tao.
Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.39 percent to 745.82 tonnes on Friday.
Gold speculators cut their net short position in COMEX gold contracts by 65,637 contracts to 37,372 contracts, the smallest since late July, in the week to Oct. 16, data showed.
The U.S. dollar, which measures the greenback against a basket of six major currencies, was down 0.1 percent.
Among other precious metals, silver was up 0.5 percent at $14.67 per ounce, while platinum rose 0.1 percent to $830.50 per ounce.
Palladium climbed nearly 1 percent to $1,090.47 per ounce, closer to an over eight-month peak of $1,096.80 hit on Oct. 11.
(Reporting by Eileen Soreng and Vijaykumar Vedala in Bengaluru; Editing by Subhranshu Sahu and Vyas Mohan)