Gold prices hit a more than two-week high on Tuesday (August 26) after US President Donald Trump said he would fire Federal Reserve Chair Lisa Cook, a move widely seen as eroding the central bank's independence and undermining confidence in US assets.

Spot gold rose 0.4% to $3,378.64 an ounce at 11:43 GMT, after hitting its highest since August 11 at $3,386.27 earlier in the session. US gold futures for December delivery rose 0.3% to $3,426.

On Monday, Trump took the unprecedented action of firing Cook over claims of mortgage loan abuse. Some investors viewed Trump's move as an attempt to secure a dovish majority among Fed members, said Carlo Alberto De Casa, an external analyst at the Swissquote banking group.

He added that this raised questions about the Fed's independence and added to market uncertainty, prompting investors to buy gold.

Non-yielding gold bullion tends to perform well when interest rates are low and amid economic uncertainty. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund (ETF), said its holdings rose 0.18% to 958.49 metric tons on Monday, from 956.77 tons on Friday.

Fed Chairman Jerome Powell on Friday hinted at the possibility of an interest rate cut next month, saying that labor market risks have increased but inflation remains a threat. "The market is pricing in a 25 basis point rate cut (in September). A large rate cut would further support gold, but I don't see this as a likely scenario," De Casa added.

Investors are awaiting further inflation data on Friday for further clues on the direction of the central bank's monetary policy. Meanwhile, China's net gold imports via Hong Kong rose 126.81% in July compared to June, according to data from the Hong Kong Census and Statistics Department on Tuesday. Elsewhere, spot silver fell 0.2% to $38.47 an ounce, platinum fell 0.2% to $1,340.30, and palladium rose 0.5% to $1,091.25.(alg)

Source: Reuters