Gold eased on Monday due to a stronger US dollar, but remained near a one-month high hit in the previous session on uncertainty over progress on a potential overhaul of the US tax code.
Spot gold was down 0.2 per cent at $1,291.44 per ounce by 0757 GMT, but not far off Friday's peak of $1,297, its strongest level since October 16. US gold futures for December delivery dropped 0.4 per cent to $1,291.20.
“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 US 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 had said on Sunday.
“The apparent difficulty in getting tax cuts approved in the US Senate has seen investors return to safe-haven assets,” ANZ analysts said in a note.
Spot gold may retest a resistance level of $1,298, a break above which could lead toward the next resistance level at $1,309, according to Reuters technical analyst Wang Tao.
Gold could easily push higher and potentially above $1,300, 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,” he said.
German coalition talks
The dollar index, which tracks the greenback against a basket of six rival currencies, gained 0.2 per cent as the euro faltered after 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.
Silver fell 0.8 per cent to $17.16 an ounce after hitting a one-month high in the previous session, while platinum retreated from Friday's near two-month peak of $954.30 and was down 0.8 per cent at $943.40. Palladium rose 0.3 per cent to $996 an ounce.