Gold prices rose to a two-week high on Tuesday 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.
The U.S. dollar sank to a 10-month low against a basket of major currencies on Tuesday, hobbled by uncertainty over the pace of the Fed’s policy tightening and setbacks to the passage of a U.S. healthcare bill.
“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.
Republicans in the U.S. Congress were in chaos over healthcare legislation after a second attempt to pass a bill in the Senate collapsed late on Monday, with President Donald Trump calling for an outright repeal of Obamacare and others seeking a change in direction toward bipartisanship.
Spot gold was up 0.3 percent to $1,237.66 per ounce at 0631 GMT, after touching $1,238.76, the highest since July 3, earlier in the session. U.S. gold futures for August delivery rose 0.3 percent to $1,236.80 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.
In other precious metals, silver rose 0.4 percent to $16.14 per ounce, after earlier touching its highest in just over two weeks at $16.23.
Source: Reuters UK