Gold prices held steady on Thursday after touching an over two-week high, buoyed by political turmoil in the United States and tempered expectations for an aggressive string of US interest rate hikes. Pressure on U.S. President Donald Trump deepened after reports that he tried to interfere with a federal investigation. This follows a turbulent week after Trump fired FBI Director James Comey and discussed sensitive national security information with Russia’s foreign minister, causing investors to question whether Trump can push through tax cuts and deregulation.
Gold is used as an alternative investment during times of political and financial uncertainty. Spot gold was flat at $1,260.61 per ounce by 0345 GMT, after earlier touching its strongest since May 1 at $1,263.02. It rose about 2 percent on Wednesday in its biggest one-day percentage gain since June last year. U.S. gold futures were up 0.2 percent at $1,260.90 an ounce.
Gold prices have pushed higher amid ongoing safe-haven buying, as geopolitical risks rose, ANZ said in a note. A weaker dollar and falls across equity markets have seen investor appetite increase substantially. With the spectre of ongoing political uncertainty, gold is likely to remain a sought after asset, it added.
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Spot gold may retrace moderately to a support at $1,252 per ounce, before retesting a resistance at $1,264, according to Reuters technical analyst Wang Tao. “I think prices have already been pushed up and we might see reversing of gold prices in one or two days. People are likely to go back to basics and see what the interest rates are going to be,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
In the wider markets, the dollar stood near six-month lows against a basket of major currencies as the U.S. political crisis appeared to deepen, and likely to delay any efforts by Trump to carry out his economic stimulus plans. A weaker dollar makes bullion cheaper for non-U.S. investors. Asian stocks fell on
Thursday with MSCI’s broadest index of Asia-Pacific shares outside Japan dropping 0.6 percent. Among other precious metals, silver inched 0.1 percent higher to $16.87 an ounce. Platinum was down 0.3 percent at $939 an ounce. Palladium was up 0.2 percent to $783.30.