By Zandi Shabalala
LONDON (Reuters) - Gold hit a five-month high on Friday as investors looking for safety piled into the precious metal after the United States fired cruise missiles at a Syrian airbase, escalating tensions with Russia and Iran.
Russia, a staunch ally of Syria, said relations between Washington and Moscow had been seriously damaged by the strike which was in retaliation for a deadly chemical attack on a rebel-held area of Syria.
Gold was up 0.9 percent at $1,262.86 an ounce by 1136 GMT after climbing to its highest since Nov. 10 at $1,269.28, putting it on track for a fourth week of gains in a row. U.S. gold futures climbed 0.9 percent to $1,264.9 an ounce.
"There is the risk that the fight over Syria will lead to a larger confrontation in which Iran and Russia, and the U.S., could get involved, so it could have more serious implications overall," Commodity Discovery Fund founder Willem Middelkoop said. "That explains why gold moved quite fast after the news broke."
Gold is often used as a hedge against political and financial uncertainty and security risks. It has benefited alongside other assets considered safe, such as the yen and U.S. Treasury bonds. [MKTS/GLOB]
Some analysts say the safe-haven support is unlikely to be sustained.
"When you look back at the historical record, these bids for gold based on 'edge-of-the-world' or wars tend to be short-lived and are followed by profit taking," Societe Generale's head of Metals Research Robin Bhar said.
Bhar said an important indicator for gold would be U.S. non-farm payrolls data due later on Friday, which his expected to show a rise of 180,000 jobs in March.
An increase above the consensus is likely to reinforce expectations of higher U.S. interest rates, which could pressure gold. Higher interest rates reduce investor appetite for the non-interest bearing precious metal.
Higher U.S. rates may also mean a stronger U.S. currency, which makes dollar-denominated gold more expensive for holders of other currencies, potentially weakening demand. [FRX/] [MKTS/GLOB]
Gold was also supported by technicals on Friday.
"Gold has broken the 200-day moving average intraday and has tested its upper resistance at $1,264, the Feb. 28 high," said Jeffrey Halley, senior market analyst at OANDA.
"A daily close above these levels can open a technical move towards $1,300 with support now at $1,250."
MKS PAMP analyst Tim Brown said if gold consolidated above $1,260 it could be a catalyst for a push higher.
Spot silver rose 0.4 percent to $18.31 an ounce, after touching $18.47, the highest since Feb. 27.
Platinum inched up 0.3 percent to $958.5 while palladium also added 0.3 percent to reach $805.00.
(Additional reporting by Nallur Sethuraman in Bengaluru and Jan Harvey in London; editing by Susan Thomas and David Clarke)
Disclaimer: No Business Standard Journalist was involved in creation of this content
