Investing.com - Gold prices were a bit lower in European trade on Thursday, but stayed near the highest level in two weeks as investors kept an eye on fresh political developments in the U.S. amid uncertainty over the future of President Donald Trump.
Comex gold futures shed around $3.00, or about 0.3%, to $1,255.29 a troy ounce by 3:00AM ET (07:00GMT). Meanwhile, spot gold was at $1,255.51. Prices of the yellow metal jumped to an overnight peak of $1,263.20, the most since May 1.
Gold notched a sixth-straight winning session on Wednesday as investors fretted over the latest news coming out of Washington.
U.S. Justice Department Deputy Attorney General Rod Rosenstein appointed former FBI director Robert Mueller as special counsel to take over the investigation of Russia's alleged interference in the U.S. presidential election on Wednesday.
That followed a report on Tuesday that said President Trump asked then-FBI Director James Comey to shut down an investigation into the actions of former National Security Advisor Mike Flynn.
The news sparked worries that the president will be unable to successfully push through his economic stimulus program in the face of mounting controversies.
The deepening political turmoil dampened demand for risk-sensitive assets, such as global equities, and sparked a rally in assets perceived as safe, such as the yen, bullion and U.S. Treasuries, which are often used as a hedge in times of political uncertainty.
The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was at 97.61 in London morning trade.
It slid to an overnight low of 97.28, levels last seen in the immediate aftermath of Trump's surprise victory in November.
The greenback was also weighed by tempered expectations for more rate hikes by the Federal Reserve later this year, as a recent string of soft data underlined concern over the health of the economy.
Odds for a June rate hike dropped to around 60%, according to Investing.com's Fed Rate Monitor Tool, down from more than 80% a week ago, while odds for a second rate hike by December fell to 30% from around 50% in the preceding week.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Also on the Comex, silver futures declined 16.4 cents, or about 1%, to $16.74 a troy ounce, after hitting its highest since May 1 at $17.03 on Wednesday.
Elsewhere in metals trading, platinum shed 0.7% to $939.30, while palladium added 0.6% to $781.67 an ounce.
Copper futures dipped 2.7 cents to $2.519 a pound.