Gold prices rose more than 1 percent on Tuesday before shedding some gains, but still held near a six-year high, as the dollar dropping to multi-month lows, and simmering US-Iran tensions drove investors towards the safe-haven bullion.

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Spot gold was up 0.4 percent at $1,424.25 per ounce, as of 0550 GMT. Earlier in the session, the yellow metal touched $1,438.63, its highest since May 14, 2013.

The bullion is headed for a sixth consecutive session of gain.

US gold futures jumped 0.7 percent to $1,427.50 an ounce

Bets for lower interest rates, weaker US dollar and tensions in the Middle East are providing an ideal environment for gains in the gold prices, said Michael McCarthy, chief market strategist, CMC Markets.

US President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other top Iranian officials with sanctions on Monday to increase pressure on Iran after Tehran's downing of an unmanned American drone.

The bullion's lure was further boosted by a weaker dollar, which slipped to a three-month low on bets that the Federal Reserve may lower interest rates before year-end on mounting worries about the fallout from tariff wars.

Fed Chairman Jerome Powell and a few other of its policymakers are due to speak later on Tuesday, and markets assume they will stick with the recent dovish message.

The standoff between Washington and Tehran, a weaker dollar and dovish signals from major central banks stoked a nearly 10 percent surge in gold prices so far this month.

Indicative of sentiment, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.37 percent on Monday, after posting their biggest percentage gain in nearly 11 years on Friday.

Meanwhile, investors looked to whether Trump and Chinese President Xi Jinping would at least call a truce in their trade war when they are expected to meet at the G20 summit in Osaka later this week.

"The main event this week will be the sidebar meeting between Trump and Xi, which could stop the current gold rally with a productive sit-down that ends up in a trade agreement," Alfonso Esparza, a senior market analyst at OANDA, said in a note.

"The flip side could boost gold prices even further as the Trump administration has shown that it could turn from friendly to aggressive in a heartbeat further fuelling investor's demand for a safe haven."

Spot gold may test a resistance at $1,439 per ounce, a break above could lead to $1,461, according Reuters technical analyst Wang Tao.

Among other precious metals, silver fell 0.3 percent to $15.38 per ounce and platinum was steady at $809.93.

Palladium declined 0.8 percent to $1,522.63 an ounce. However, the metal hit $1,545.87 earlier in the session, its highest since March 27.

First Published:Jun 25, 2019 7:34 AM IST