SINGAPORE – Gold priced in sterling surged to the highest level in more than seven weeks after projections showed Prime Minister Theresa May will fail to win an overall majority in the UK general election, signaling further political turmoil less than a year after Britain voted to leave the European Union.

The election campaign was dominated by security issues and Brexit amid terror attacks and as the government prepared to start talks to pull the country out of the EU. While the ruling Conservative Party is projected to win most seats in parliament, the predictions indicated it will fall short of an absolute majority.

The results are coming in after a day when the European Central Bank kept interest rates unchanged and former FBI Director James Comey gave testimony to a Senate panel about meetings with President Donald Trump that  centered on whether the President sought to quash part of a federal probe into Russian meddling in the 2016 election.

Gold for immediate delivery rose as much as 2.2% to £1 007.52/oz before trading at £997.44 by 9:46 a.m. in Singapore. Prices increased as the  pound slumped against the dollar. Bullion in the US currency retreated 0.2% to $1 275/oz, sliding for a third day and extending its decline from a seven-month high this week of $1 296.15. It’s heading for the first weekly drop since the start of May.

“We’re primarily seeing the pound weaken as talk starts to come out that perhaps the Tories haven’t won the absolute number of seats they were looking for,” said David Lennox, a resource analyst at Fat Prophets in Sydney. ‘‘That’s why we’ve seen the pound weaken and in gold terms it should have risen.”

POLITICAL GAMBLE
May’s Conservative Party was on course to win 322 seats, the BBC forecast, down from the 330 she held before calling the snap election seven weeks ago. That’s short of the 326 seats she needs for an overall majority but possibly enough for her to govern without the support of other parties. Jeremy Corbyn’s Labour Party will win 261 seats, compared with 229 before the election.

Gold’s moves in dollar terms were muted as investors weighed Comey’s testimony, the ECB’s policy decision and the almost certain hike in US interest rates next week. Comey and Trump accused each other of lying about their meetings in the wake of the Senate testimony, while the labor market remains a bright spot, with fewer Americans filing for unemployment benefits last week.

“James Comey, there was really nothing in his verbal testimony; he sort of fleshed out a few details of things we already primarily knew,” Lennox said. “The ECB kept pat on interest rates, but came out with a rhetoric that they would be perhaps looking to unwind in the future, same as we saw with the Fed.” The strength of the dollar helped push gold down, he said. The Bloomberg Dollar Spot Index rose 0.2% on Friday, up for a third day.

Investors are turning their focus to the Federal Reserve meeting on June 13 and 14, where an interest rate increase is widely expected and markets will be looking for further clues on the tightening cycle. Gold may trade between $1 266 and $1,290 in the runup to the meeting, said Jordan Eliseo, chief economist at Australian Bullion Co.

While prices in dollar terms have come off the seven-month highs, assets in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, have expanded by about 2% this week to 867 metric tons, the highest level since December.