Gold spiked to session highs Friday on renewed tension in the South China Sea after word that China seized an American underwater drone off the coast of the Philippines on Thursday. The precious metal hit a session high above $1,141 an ounce, up 1%, as word of the incident crossed the wires, but it has since pulled back to $1,137.
Gold typically does well during periods of uncertainty.
The precious metal has been under pressure of late despite the election of Donald Trump. Analysts believed Trump’s win would be a positive for gold because of the presumption his protectionist trade policy and plans for massive infrastructure spending would bring back inflation to the US.
Selling since the July peak of $1,375 has the metal approaching bear-market territory, a drop of 20%, with much of that move coming after the election of Trump.
Heavy selling on Wednesday pushed gold down by more than 2% as the Fed suggested it could hike rates three times in 2016, once more than its previous forecast.