Gold scales 5-week peak

Gold rose to its highest in more than 5 weeks on Tuesday as the dollar sagged.

Gold rose to its highest in more than 5 weeks on Tuesday as the dollar sagged after the United States and China agreed a 90-day pause on fresh trade tariffs, while palladium hit a record high, leaving it about $4 short of parity with bullion.

Palladium rose more than 2 per cent to $1,231.50 per ounce by 1310 GMT, after scaling an all-time high of $1,235.

"The market is structurally in a significant deficit, so there are clearly concerns about that. We've got a lot momentum and positive investor sentiment flowing into the market at the moment," said Capital Economics analyst Ross Strachan.

The metal, used mainly used in emissions-reducing auto catalysts for vehicles, has gained about 48 per cent since mid-August, but not all analysts think the price is justified.

"The high price premium on palladium is not justified in our opinion because car sales have been fairly weak on all key markets of late," Commerzbank analysts said in a note.

Meanwhile, spot gold rose for the second straight session, up 0.6 per cent at $1,238.90. Prices touched $1,241.10 earlier in the session, their highest since October 26.

US gold futures were up 0.4 per cent at $1,244.70 per ounce.

The dollar weakened against its major peers, pressured by a thaw in trade tensions between Washington and Beijing, making gold cheaper for holders of other currencies.

"Primarily it is the weaker dollar that is providing assistance and that will be the key driver in the short term," Capital Economics' Strachan said.

"However, it is going to find it difficult to sustain the current rally unless there is even more dollar weakness, simply because the [overall] investor sentiment for riskier assets has improved and that would prove to be a drag in the short term." - Reuters