The gold price began the year on solid footing amid increasing geopolitical uncertainty and a sharp selloff in risk assets. Gold for February delivery on the Comex division of the New York Mercantile Exchange was last up $16.70 or 1.6 percent to $1,076.90 per ounce. Trade has ranged from $1,061.0 to $1,078.0. There was downbeat geopolitical news over the weekend. Saudi Arabia severed diplomatic ties with Iran after Iranian protesters raided Saudi Arabia’s embassy in Tehran Sunday following Saudi Arabia’s execution of Shi’ite cleric Nimr al-Nimr on Saturday. “Cooler heads are prevailing for the moment, and perhaps they shall prevail, but until they have clearly prevailed the situation is tense and growing more so by the hour,� Dennis Gartman, editor and publisher of The Gartman Letter, said while mentioning that $1,085 per ounce is the technical resistance point for gold. Bahrain and Sudan have also severed their relations with Iran, while the United Arab Emirates is declining diplomatic talks in the interim. In spec positioning, gold ETF holdings stood at 1,487 tonnes as of December 31 – were unchanged from last week. More importantly, they appear to have bottomed out at the low of 1,474 tonnes as of December 17. But ETF investors were still net sellers of 19 tonnes of gold in December. “Our technical and fundamental analysis suggests that gold prices will continue along the bottom in the near term,� Boris Mikanikrezai, a Fastmarkets analyst, said. “We expect a gradual improvement in spec positioning after it reached a bearish extreme; the risks to gold prices are skewed to the upside over a one-month horizon,� he added. Meanwhile in data, US final manufacturing PMI, ISM manufacturing PMI construction spending and ISM manufacturing prices are all slated for release later today. Turning to wider markets, Germany’s DAX and France’s CAC-40 were down four percent and 2.4 percent respectively, while the dollar was unchanged at $1.0857 against the euro. Elsewhere, December’s Caixin manufacturing PMI at 48.2 missed the forecast of 48.9 and was below November’s 48.6. This was the 10th straight month in which the figure was below 50, which signifies contraction. “This shows that the forces driving an economic recovery have encountered obstacles and the economy is facing a greater risk of weakening,� He Fan, chief economist at Caixin Insight Group, said. Based on these fears, the Shenzhen Composite and the Shanghai Composite fell 8.2 percent and 6.86 percent respectively – trading on both exchanges was suspended after the authorities implemented a circuit-breaker for the first time. As for other precious metals, Comex silver for March delivery jumped 35.2 cents or 2.6 percent to $14.155 per ounce. Trade has ranged from $13.800 to $14.170. Platinum for April settlement declined $6.50 to $885.20 per ounce, while the most-actively traded palladium contract was last at $544.55 per ounce, down $17.45.

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