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 US Federal Reserve this year and doubts whether President Donald Trump would be able to push through healthcare reforms.
The US 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 US healthcare Bill.
“With the street repricing its US 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 US dollar should continue to support gold,” said Jeffrey Halley, a senior market analyst at OANDA.
Republicans in the US 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 per cent to $1,237.66 per ounce at 0631 GMT, after touching $1,238.76, the highest since July 3, earlier in the session. US gold futures for August delivery rose 0.3 per cent 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.
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 per cent to 827.07 tonnes on Monday from 828.84 tonnes on Friday.
In other precious metals, silver rose 0.4 per cent to $16.14 per ounce, after earlier touching its highest in just over two weeks at $16.23. Platinum rose 0.3 per cent to $923.80 per ounce. It had touched an over one-month high of $934.40 in the previous session. Palladium was mostly unchanged at $864.98 per ounce.