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LONDON — Gold prices rose on Tuesday, but gains were limited as traders weighed a buoyant dollar against a deepening political crisis in Italy that provoked a second day of heavy selling on European financial markets.

Italy’s president set the country on a path to early elections on Monday, appointing a former International Monetary Fund official as interim prime minister with the task of planning for snap polls and passing the next budget.

Investors fear repeat elections — which could take place as soon as August — might serve as a quasi-referendum on Italy’s role in the European Union and euro zone and strengthen the country’s euroskeptic parties even further.

Gold, seen as a safe haven, often gains from political turmoil. But keeping the metal’s upside in check, the events in Italy pushed the dollar to a 10-month high versus the euro, making dollar-priced gold costlier for non-US investors.

Spot gold gained 0,18 percent at $1 300,01 per ounce by 1:36 pm EDT (1736 GMT), earlier hitting a five-day low of $1 293,40, while US gold futures for June delivery settled down $4,70, or 0,4 percent, at $1,299 per ounce.

Markets are approaching a massive risk-off event, said Shree Kargutkar, vice president and portfolio manager at Sprott Asset Management.

“Traders have begun buying the US dollar versus the euro, sterling, as well as (emerging market) currencies, which explains why the US dollar has been rising,” he said.

“Gold has been behaving exceptionally well when measured across various major currencies and it continues to maintain an uptrend against the US dollar as well.”— Reuters