Gold prices hit a more than two-week high on Tuesday after US President Donald Trump said he was removing Federal Reserve Governor Lisa Cook, a move seen by many as eroding the central bank's independence and undermining confidence in US assets.
Spot gold was up 0.4% at $3,378.64 an ounce at 1143 GMT, having hit its highest since August 11 at $3,386.27 earlier in the session.
US gold futures for December delivery were up 0.3% at $3,426.
Trump on Monday took the unprecedented action of firing Cook over mortgage borrowing impropriety claims.
Some investors are seeing Trump's move as an attempt to secure a dovish majority in the Fed's members, said Carlo Alberto De Casa, an external analyst at banking group Swissquote.
He added that this raises questions about the Fed's independence and adds market uncertainty that prompts investors to buy gold, Reuters reported.
Prices of non-yielding bullion tend to perform well when interest rates are low and in times of economic uncertainty.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose by 0.18% to 958.49 metric tons on Monday, from 956.77 tons on Friday.
Fed Chair Jerome Powell on Friday signalled a possible rate cut next month, saying that job market risks were rising but inflation remained a threat.
"Markets are pricing a 25 bps rate cut (in September). A jumbo cut would help gold further, but I don't see this as a likely scenario," De Casa added.
Investors are awaiting further inflation data on Friday for more clues on the central bank's monetary policy path.
Meanwhile, China's net gold imports via Hong Kong rose 126.81% in July from June, Hong Kong Census and Statistics Department data showed on Tuesday.
Elsewhere, spot silver fell 0.2% to $38.47 an ounce, platinum was down 0.2% at $1,340.30 and palladium rose 0.5% to $1,091.25.
