Gold rose over 1 per cent to touch a one-month high on Monday as the dollar slid after President Donald Trump’s failure to pass healthcare reform raised doubts over his ability to push through his economic agenda.
Spot gold rose 1 per cent to $1,256.20 per ounce by 0401 GMT, after hitting $1,257.97, its highest since February 28.
US gold futures were up 0.6 per cent at $1,256.30. President Trump suffered a stunning setback on Friday as his own Republican party pulled legislation to overhaul the US healthcare system, a major election campaign promise of the president and his allies.
The blow so early in Trump’s term unnerved financial markets, heightening worries about the chances of economy-boosting steps being enacted, such as tax reforms and big spending packages.
“Looks like some people are not happy with Trump’s failure over his promises and we see that currently there is a very bearish mood about the US dollar,” said Jiang Shu, chief analyst at Shandong Gold Group.
The dollar slid to a near two-month low against a basket of currencies on Monday, dropping to its worst since February 2.
“With Trump’s 100 days of action rapidly becoming 100 days of inaction, and ahead of French elections, gold should remain bid on any meaningful dips going forward,” said Jeffrey Halley, senior market analyst at OANDA.
However, gold should struggle in the short-term as major resistance in the shape of the 200-day moving average at 1260.50 looms large and the market is looking overbought, Halley added.
Bullion has rallied nearly $60 since March 15 lows following a less hawkish policy statement from the US Federal Reserve.
Delicate interest-rate hikes are necessary given the United States may be on the cusp of a jump in inflation, William Dudley, one of the Federal Reserve’s most influential officials had said on Friday.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding assets that do not earn interest and also strengthen the dollar. Gains in the dollar typically weaken any commodity denominated in the currency.
Hedge funds and money managers boosted their net long positions in COMEX gold after two weeks of cuts and reduced them slightly in silver in the week to March 21, US Commodity Futures Trading Commission data showed on Friday.
Spot silver rose 0.6 per cent to $17.85 an ounce, after hitting a near 3-week high of $17.88. Platinum rose 0.8 per cent to $968.74, while palladium was firm at $809.30. It touched an over 2-week peak of $815.40, its best since March 10, 2015.