Gold holds near 3-week peak as Trump probe knocks risk appetite

* Spot gold may rise more to $1,546/oz – technicals
* Palladium touches record peak at $1,676.53/oz
* Dollar recovers after Tuesday’s drop (Adds comments, updates prices)
Sept 25 (Reuters) – Gold held near a three-week peak on Wednesday as an impeachment inquiry into U.S. President Donald Trump raised political uncertainty in the world’s largest economy, triggering a broader sell-off in equity markets.
Deficit-hit palladium meanwhile continued its record run to a fresh all-time high.
Spot gold was at $1,530.29 per ounce at 0958 GMT, little changed from the previous day, when it hit its highest since Sept. 5 at $1,535.60. U.S. gold futures eased 0.1% to $1,538.30.
Democrats in the U.S. House of Representatives on Tuesday launched a formal impeachment inquiry into Trump, alleging he sought foreign help to smear Democratic rival Joe Biden ahead of next year’s election.
“Gold is holding on to the gains from yesterday because of announcements which seem to have hit the dollar and risk appetite,” said OANDA senior market analyst Craig Erlam. “(That) is almost perfect for gold.”
“We’re going to have a lot of commentary over the coming days which is going to play in risk appetite,” he added.
The impeachment threat increased the prospects of prolonged political uncertainty, driving investors out of assets seen as higher risk, with world stocks falling to a two-week low.
Gold is considered a safe store of value during times of political and financial uncertainty.
The impeachment inquiry push and disappointing U.S. economic data rattled Wall Street on Tuesday, with the S&P 500 posting its biggest daily decline in a month.
Meanwhile, the dollar rose, recovering overnight losses and stemming bullion’s advance.
On the trade front, Trump delivered a stinging rebuke to China’s trade practices in a speech on Tuesday, saying he would not accept a “bad deal” in U.S.-China negotiations.
“In the short term, economic and geopolitical uncertainty is likely to keep gold prices supported, and possibly even lift them to $1,600/oz,” OCBC analysts said in a note.
On the technical side, spot gold may rise to $1,546 per ounce as it has cleared a resistance at $1,524, according to Reuters technical analyst Wang Tao.
Among other precious metals, palladium was steady at $1,673.49 an ounce, after hitting a record peak of $1,676.53 earlier in the session.
The metal has rallied more than 20%, or nearly $300, since touching a near two-month low in early August, driven by a sustained supply deficit for the autocatalyst metal.
Silver edged 0.1% lower to $18.56 an ounce and platinum fell 0.1% to $952.36.