REUTERS - Gold was trading near its highest in more than three months on Wednesday, buoyed by safe-haven buying due to geopolitical tensions in Syria.
The United States and its allies are gearing up for a probable military strike against Syrian President Bashar al-Assad's government as punishment for last week's chemical weapons attacks.
Stock markets in the US and Asia fell on the news, while oil prices hit six-month highs.
"When things get uncertain you will always see a bigger interest in gold," said Mr Han Pin Hsi, global head of commodities research at Standard Chartered Bank in Singapore.
Spot gold edged up 0.04 per cent to US$1,416.66 (S$1,818.5) an ounce by 0245 GMT. The metal hit US$1,423.41 on Tuesday - its highest since May 15.
"We may be seeing a new trading paradigm setting in the next few days, one whereby investors sour on stocks and file back into commodities, with oil and gold likely being the two favourites in the group," INTL FCStone analyst Edward Meir wrote in a note.
Gold has lost about 15 per cent of its value this year as investors shifted to higher-yielding equities on the back of a strong US economic data.
However, the metal has recovered about US$240 an ounce, or 20 per cent, since hitting a near three-year low of US$1,180.71 in late June, helped largely by short covering and technical buying.
Inflows into SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, have also boosted market sentiment. Holdings are near four-year lows but have risen in the last two weeks.
Data from the International Monetary Fund on Tuesday showed that central banks continued to add to their gold reserves.
Turkey added the most by buying 22.5 tonnes of gold in July, while Russia's holdings topped 1,000 tonnes.
"Emerging market central banks will continue to accumulate gold as an important cornerstone to reserves, this is one of the factors that will continue to underpin gold demand in coming years," ANZ analysts said.