Gold ticks up on Iran tensions; firmer dollar limits upside

Gold prices gained on Monday following a steep fall in the previous session as tensions in the Middle East and weaker financial markets supported the metal, while a stronger dollar kept a lid on gains.

Spot gold was up 0.2 percent at $1,427.26 per ounce as of 0322 GMT. The metal hit $1,452.60 in the previous session, its highest since May 2013, before closing 1.5 percent lower.

U.S. gold futures were up 0.1 percent at $1,428.50 an ounce.

"Over the weekend, what happened between Iran and the United Kingdom is supporting gold prices today," said Brian Lan, managing director at dealer GoldSilver Central in Singapore.

"Also, equities are lower and at this point of time with geo-political tensions and the Fed looking to cut rates, gold looks attractive, but people are worried about the stronger dollar."

Iran's Revolutionary Guards said they had captured a British-flagged oil tanker in the Gulf after Britain seized an Iranian vessel earlier this month, ratcheting up tensions along a vital international oil shipping route.

Britain was weighing its next moves on Sunday, with few good options apparent as a recording emerged showing that the Iranian military defied a British warship when it boarded and seized the ship three days ago.

"Geopolitical risks from the Gulf could provide some support for the yellow metal, but the next major move will likely be if the Fed is dovish enough for markets," Edward Moya, a senior market analyst at OANDA, said in a note.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.72 percent to 820.49 tonnes on Friday from Thursday.

Hedge funds and money managers raised their bullish stance in COMEX gold in the week to July 16, the U.S. Commodity Futures Trading Commission (CFTC) said in a report on Friday.

Among other precious metals, silver rose 0.7 percent to $16.32 per ounce.

Platinum gained 0.6 percent to $848.88 an ounce and palladium climbed 0.4 percent to $1,511.84.