Gold prices on Wednesday held steady near three weeks-high reached in the previous session as risk-averse investors sought safer investments amid a weak dollar and as equities dropped on doubts about U.S. President Donald Trump’s economic agenda.
Spot gold was unchanged at $1,245.12 per ounce by 0248 GMT. On Tuesday, it rose as much as 1.2 percent to its strongest since March 2 at $1,247.60.
U.S. gold futures were down 0.1 percent at $1,245.10.
The dollar index, which measures the greenback against a basket of currencies, was at 99.858, near the six-week low of 99.642 reached on Tuesday.
Asian stocks posted their biggest drop in two weeks on Wednesday as growing doubts about President Trump’s economic growth agenda prompted investors to dump risky assets.
“It seems that equity investors decided to take some money off the table, perhaps getting slightly wary about the progress in President Trump’s legislative agenda,” INTL FCStone analyst Edward Meir said.
“Gold will likely continue to rally going into Wednesday’s session as Tuesday’s U.S. stock market selloff was significant and will likely have a knock-on effect on international equity markets over the next 24 hours.”
Gold rallied nearly $50 in the wake of last Wednesday’s less-hawkish-than-expected policy statement from the U.S. Federal Reserve, which dampened speculation the central bank would raise interest rates quickly this year.
“The re-positioning of investors since the FOMC meeting continues unabated, with investors becoming less bearish as a result of the subdued outlook for rates in 2018,” ANZ analysts said in a note.
The lack of a concrete policy from the Trump administration is worrying investors and more people will opt for gold as a safe-haven investment when the stock markets go lower, analysts and traders said.
“With the fate of the health care bill uncertain, more important legislation that equity investors want to see passed, namely, tax reform and infrastructure spending are both bottled up and languishing,” INTL FCStone analyst Meir said.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.50 percent to 834.40 tonnes on Tuesday from 830.25 tonnes on Monday.
Holdings rose 4.15 tonnes on Tuesday after three straight sessions of outflows, underpinning investors’ interest in the metal.
Spot silver edged down 0.1 percent to $17.46 per ounce, after hitting an over two-week high of $17.59 in the previous session.
Platinum rose 0.2 percent to $969 per ounce, after touching two-week peak at $974.80 on Tuesday.
Palladium dropped 0.5 percent to $781.50 per ounce. The metal hit over one-month highs at $792 in the prior session.
Source: Reuters
