Gold Bars
Gold bars are seen in this picture illustration taken at the Czech National Bank in PragueReuters

Safe haven punters returned to the fore on Wednesday (17 May) driving gold prices higher as the dollar weakened on US political uncertainty.

Earlier in the session, allegations surfaced of US President Donald Trump having asked former Federal Bureau of Investigation (FBI) director James Comey – whom he sacked last week – to end a probe into his former security adviser. The White House subsequently rubbished the allegation.

At 1:37pm BST, the Comex gold futures contract for the June delivery was up 1.01% or $12.30 at $1,248.70 an ounce, while spot gold was trading at $1,249.58 an ounce, up 1.00% or $12.34 an ounce.

Liz Grant, senior account executive at Sucden Financial, said: "The yellow metal overcame overhead resistance at $1,240 as the dollar continued to weaken intraday on Trump's Russia intelligence leak."

FXTM research analyst Lukman Otunuga said although US interest rate hike expectations are likely to dictate where gold trades to in the medium to longer term, uncertainty, and geological tensions should support the metal in the short term. Persistent dollar weakness should encourage short term bulls."

Elsewhere, Comex silver for July delivery was up 1.00% or 17 cents to $16.92 an ounce, while spot platinum was up 0.19% or $1.80 to $943.16 an ounce.

Away from precious metals, oil benchmarks remained on positive turf following confirmation by Saudi Arabia and Russia of production cut extensions. Both countries said on Monday they would extend an agreement to cut output, originally designed to end in June 2017, for a further nine months until March 2018.

Speaking at the end of a meeting in Beijing, Saudi energy minister Khalid al-Falih and his Russian counterpart Alexander Novak stated both countries would do "whatever it takes" to reduce the current oil glut.

Meanwhile, in its latest Oil Market Report, the International Energy Agency (IEA) downgraded its 2017 US demand growth expectations to zero. However, overall the IEA's global demand outlook has been revised down only by a marginal 45,000 barrels per day (bpd) compared to last month's report and is now seen at 1.3 million bpd.

However, analysts at Vienna-based JBC Energy cautioned: "The required recovery in growth to get to the full-year figure is by no means a done deal, with economic, monetary, and potentially Opec/non-Opec induced price headwinds being the main concerns."