Gold prices surged Tuesday to a two-week high as the dollar dipped to multi-month lows amid fading prospects of further rate hikes by the U.S. Federal Reserve this year and doubts whether President Donald Trump would be able to push through healthcare reforms.
Asian shares stepped back from more than two-year highs on Tuesday, while the dollar extended losses as passage of a U.S. healthcare bill grew doubtful and investors bet the Fed would be more cautious about raising interest rates.
“With the street repricing its U.S. interest rate outlook following soft data and a dovish Yellen, and with President Donald Trump’s reflationary reforms seemingly lost in the legislative Bermuda Triangle of Congress, a weaker U.S. dollar should continue to support gold,” said Jeffrey Halley, a senior market analyst at OANDA.
Republican Senators Jerry Moran and Mike Lee announced their opposition on Monday to a revised Republican healthcare bill, delivering a serious blow to the legislation.
Spot gold rose 0.3 percent to $1,237.05 per ounce at 0328 GMT, after touching $1,238.27, the highest since July 3, earlier in the session.
U.S. gold futures for August delivery rose 0.3 percent to $1,236.90 per ounce.
“At this moment, gold is likely to be in the trading range of $1,200-1,250,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
Prices of the metal are unlikely to significantly break above these levels since there are no other major drivers, including geopolitical factors, for gold as of now, he added.
Spot gold faces a resistance at $1,239 per ounce, and may temporarily hover below this level or retrace towards a support at $1,226, according to Reuters technical analyst Wang Tao.
Meanwhile, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.21 percent to 827.07 tonnes on Monday from 828.84 tonnes on Friday.
In other precious metals, silver rose 0.7 percent to $16.18 per ounce.
Platinum fell 0.2 percent to $919.75 per ounce. It had touched an over one-month high of $934.40 in the previous session.
Palladium was up 0.2 percent to $866.50 per ounce.
Source: Reuters
