By Stephanie Yang and Katherine Dunn 

Gold prices rose to their highest in over three months on Thursday as investors brushed off concerns over an interest-rate increase and focused on global political risks.

Gold for April delivery settled up 1.5% at $1,251.40 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest close since Nov. 10. Thursday's move marked the biggest one-day gain for gold since December.

On Wednesday, minutes released from the Federal Reserve's last policy meeting showed officials plan to raise rates "fairly soon," but left investors doubting that the central bank will act at the March meeting.

"When talking about [voting] members, they were much more relaxed, even sanguine about having to do any rate hikes," said Tai Wong, head of metals trading at BMO Capital Markets. "The Fed doesn't have their finger on the trigger for March at any rate."

The Fed raised interest rates in December and cited plans to raise rates as many as three times in 2017. Higher rates tend to weigh on gold, which pays holders nothing and becomes less attractive compared with yield-bearing assets when borrowing costs rise.

Gold prices have gained 8% this year, regaining much of the losses seen after the U.S. presidential election and expectations for economic growth drove investors out of safe-haven assets. However, renewed concerns about political risks around the world have sent investors back into gold, analysts said.

A weaker dollar also helped gold on Thursday. The WSJ Dollar Index was recently down 0.3% at 90.84, making dollar-denominated commodities like gold cheaper for other currency holders.

Meanwhile, copper prices dropped on questions over supply concerns at the world's largest copper mine. Futures for May delivery fell 3.2% at $2.6590 a pound, closing at a two-week low.

In Chile, the union strike at the Escondida mine, is about to enter its third week. The mine is majority-owned by BHP Billiton Ltd. A dispute over an export license for Freeport-McMoRan Inc.'s Grasberg mine in Indonesia has also stifled production.

"The problem with copper for all traders is going to be, we don't have an in on how the strike situation at Escondida mine is going," said Ira Epstein, a strategist with The Linn Group.

Overly bullish positioning exaggerated copper's losses on Thursday, Mr. Epstein said, as investors exited positions while prices dropped. Net bullish bets on copper prices rose to a record high this year, according to data from the Commodity Futures Trading Commission.

"Everybody's long," he said. "Whenever everybody is one-sided, it's almost a surefire death."

The London Metal Exchange's three-month copper contract closed down 3% at $5,859.00 a metric ton on Thursday. Other base metals also closed lower.

Aluminum fell 0.9% to $1,867.00 a ton, zinc fell 2.6% to $2,790.00 a ton, tin fell 2.8% to $18,780.00 a ton, nickel fell 2.1% to $10,580.00 a ton and lead fell 1.7% to $2,238.00 ton.

Write to Stephanie Yang at stephanie.yang@wsj.com and Katherine Dunn at Katherine.Dunn@wsj.com

(END) Dow Jones Newswires

February 23, 2017 15:13 ET (20:13 GMT)

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