BENGALURU: Gold prices edged higher on Friday, supported by a weaker dollar and safe-haven demand amid US political concerns and tensions between the UK and Russia.

However, further gains were capped by expectations that the US Federal Reserve would raise interest rates at its policy meeting next week.

Spot gold was up 0.2 per cent at $1,317.97 per ounce as of 0821 GMT.

US gold futures for April delivery were little changed at $1,317.80.

“As choppier markets seem likely, gold will remain a good hedge against unexpected spikes in equity market volatility and geopolitical tensions, in our view,” UBS analysts said in a note.

Growing US political uncertainties following the recent departure of two key officials, former Secretary of State Rex Tillerson and top economic adviser Gary Cohn, from the Trump administration have left investors worried.

The dollar fell versus the yen on Friday, after a report that US President Donald Trump would remove his national security adviser added to concerns about recent White House personnel changes and what that meant for policy.

A weaker dollar makes bullion cheaper for holders of other currencies.

Concerns over the investigation into the Trump Organization also tested investor nerves, already frayed by fears US tariffs could hurt the global economy and trigger a trade war.

US Special Counsel Robert Mueller has subpoenaed the Trump Organization for documents, including some related to Russia, the New York Times reported on Thursday.

Meanwhile, Moscow said it would retaliate against London’s move to expel 23 Russian diplomats over a nerve toxin attack on a Russian former double agent in Britain.

“Bullion continues to search for a catalyst to break out of the recent range, and in lieu of such an event we expect the metal to hold within $1,313 — $1,330, noting any extension lower should meet strong support toward $1,300,” MKS PAMP Group trader Sam Laughlin said in a note.

The Fed will begin its two-day rate-setting meeting on March 20, at which the US central bank is expected to raise interest rates for the first time this year.

“Investors are starting to focus on next week’s Fed meeting, which should be constructive for the dollar and bearish for gold,” said INTL FCStone.

Gold is highly sensitive to rising US interest rates, because it becomes less attractive to investors since it does not bear interest.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.5 per cent from a day earlier to 838.15 tonnes on Thursday, marking the biggest inflow since January.

Meanwhile, silver rose 0.5 per cent to $16.45 an ounce.

Platinum edged up 0.1 per cent to $955.40, while palladium climbed 0.1 per cent to $987.00.