Gold touched a two-week high on Tuesday, as the dollar slipped after U.S. President Donald Trump said he was removing Federal Reserve Governor Lisa Cook, a move that undermines confidence in U.S. assets and the central bank's independence.
Spot gold gained 0.2% to $3,374.49 per ounce, as of 0644 GMT, after hitting its highest level since August 11 earlier in the session.
U.S. gold futures for December delivery rose 0.1% to $3,421.50.
"Trump has put traders a little bit on edge once again with his comments about Cook, which has resulted in gold picking up additional safe-haven flows today," KCM Trade chief market analyst Tim Waterer said.
"There is a sense that Trump may be reshaping the Fed into a more dovish-leaning body, and any resulting dollar depreciation or move lower in yields would likely suit gold."
The U.S. dollar index fell 0.2% against its rivals, making gold less expensive to overseas buyers.
Trump on Monday took the unprecedented action of firing Cook, the first African-American woman to serve as a Fed governor, over claims of mortgage borrowing impropriety.
On Friday, Fed Chair Jerome Powell signalled a possible rate cut at the Fed's meeting next month, saying that risks to the job market were rising but inflation remained a threat, and that a decision wasn't set in stone.
Non-yielding gold tends to appreciate in a low-interest-rate environment, which reduces the opportunity cost of holding bullion.
Focus now shifts to the Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge, for more cues on U.S. rate-cut path. The report is due on Friday.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.18% to 958.49 metric tons on Monday from 956.77 tons on Friday.
Elsewhere, spot silver rose 0.4% to $38.71 per ounce, platinum eased 0.2% to $1,340.10 and palladium climbed 0.7% to $1,093.95. - Reuters
