Gold prices dipped early on Monday on a stronger US dollar, but remained close to a one-month high hit in the previous session on uncertainty over progress on a potential overhaul of the US tax code.
Spot gold had edged down 0.2 per cent to $1,291.71 per ounce by 0417 GMT. On Friday, gold jumped about 1.3 per cent to nark a one-month peak of $1,297.
US gold futures for December delivery dropped 0.3 per cent to $1,292.30.
“Friday’s move higher has definitely improved gold’s chart patterns, but it remains to be seen if this will be enough to attract fresh fund buying,” INTL FCStone analyst Edward Meir said in a note.
“Much of this will depend on the progress (or lack thereof) that the US tax bill makes in the Senate. If efforts to pass it flounder, we could see a much sharper correction set in over U.S. equities, prompting another leg higher in gold.”
US President Donald Trump would not insist on including repeal of an Obama-era health insurance mandate in a bill intended to enact the biggest overhaul of the tax code since the 1980s, a senior White House aide said on Sunday.
“The apparent difficulty in getting tax cuts approved in the US Senate has seen investors return to safe-haven assets,” ANZ said.
Spot gold may retest resistance at $1,298 per ounce, a break above which could lead to a gain to the next resistance level at $1,309, according to Reuters technical analyst Wang Tao.
“I think gold could easily push higher towards and potentially above $1,300 an ounce,” said Jordan Eliseo, chief economist at gold trader ABC Bullion.
“A little bit of momentum is creeping in this market, so that shouldn’t be a surprise. Meanwhile, a little bit of volatility is creeping up in other financial markets.”
The dollar index, which tracks the US currency against a basket of six major rivals, gained 0.3 per cent.
The euro hit a two-month low against the yen on Monday, as German Chancellor Angela Merkel’s efforts to form a three-way coalition government failed, raising concerns over political uncertainty in the euro zone’s largest economy.
Hedge funds and money managers raised their net long positions in COMEX gold and silver contracts in the week to November 14, data showed on Friday.
Meanwhile, silver fell 0.8 per cent to $17.17 after hitting a one-month high of $17.373 in the previous session, while platinum drifted away from Friday’s near-two month peak of $954.30 and was down 1.1 per cent at $939.99.
Palladium rose 0.2 per cent to $994.85 an ounce.
