(Reuters) – On Wednesday, gold prices rallied to 3-1/2 month highs over $1,430 an ounce as growing tensions over Syria flashed safe-haven demand and a climb amid investors to decrease their bets on dropping prices.
Gold touched a peak of $1,433.31 an ounce in early trade, its highest since May 14, as the U.S. and its allies geared up for a possible military strike against Syria that could come within days.
Spot gold increased 0.7% at $1,425.60 an ounce at 0933 GMT, while U.S. gold December futures for delivery also rose $5.60 an ounce at $1,425.80.
The London A.M. fix is $1,425.50.
Credit Suisse analyst Tom Kendall said “There is a degree of safe-haven demand from in and around the Middle East, and with the move up in price in the last couple of weeks, you’ve had something of the order of 6 million ounces of short-covering going through on the Comex futures and options market. That’s been playing into it as well.”
Investors sold gold greatly in the first half of 2013, pressing prices to their lowest in nearly three years, on assumption that the U.S. monetary policy was coming to an end. Many put themselves for more losses and now had to close out those positions.
Prices have increased nearly 8% this month, their largest monthly rise since January 2012, as prospects retreated that the Federal Reserve is set to imminently taper its bullion-friendly $85 billion monthly bond-buying program.
Gold prices in India hit record highs in rupee terms for 2 days on Wednesday, as the rupee fell to a record low against the dollar.
October delivery the most-traded gold on the Multi Commodity Exchange (MCX) hit a top of 34,622 Indian rupees per ten grams.