Gold hits one-week high on dollar weakness, geopolitical tensions

Gold prices touched their highest in a week early on Wednesday, as the dollar index hovered near two-week lows and investor jitters about a host of geopolitical tensions stoked demand for the safe-haven metal. Spot gold was on track for a fourth straight session of gains, up 0.1 percent at $1,340.64 an ounce as of 0320 GMT. Prices earlier rose to a one-week high of $1,342.64 an ounce. U.S. gold futures were down 0.1 percent at $1,344 an ounce.

"Lots of things are happening at the same time - the (U.S.-China) trade war, a possible U.S. attack on Syria that navigates to conflict between the U.S. and Russia, and that has a very strong impact on gold markets," said Yuichi Ikemizu, Tokyo branch manager at CIBC Standard Bank.

"Tensions between China and the U.S. seem to be relaxing after Xi`s conciliatory note, but with the Trump administration, people are not really sure what is going to happen next," Ikemizu said. "So investors want to hold positions in gold." 

Russia and the United States tangled on Tuesday at the United Nations over the use of chemical weapons in Syria as Washington and its allies considered whether to strike at President Bashar al-Assad`s forces over a suspected poison gas attack last weekend.

The dollar traded near a two-week low against a basket of currencies on Wednesday after Chinese President Xi Jinping`s promise to cut import tariffs eased concerns about a U.S.-China trade conflict. 

U.S. President Donald Trump welcomed Xi`s promise to open China`s economy further, expressing confidence the world`s two largest economies would come through an ongoing trade spat and "make great progress together".

Spot gold may retest a resistance at $1,354 per ounce, a break above which could open the way towards the next resistance at $1,382, according to Reuters Technical analyst Wang Tao 

Meanwhile, investors waited for cues on the outlook for U.S. monetary tightening from consumer inflation data and minutes from the Federal Reserve`s March meeting, due later on Wednesday.

Tighter monetary policy raises the opportunity cost of holding non-yielding bullion.

In other precious metals, silver was down 0.1 percent at $16.54 an ounce.              

Platinum rose half a percent to $928.65 an ounce, while palladium fell 0.4 percent to $948.70 an ounce.