Gold firms in thin trade as dollar softens, markets await Trump tax plans

NEW YORK/LONDON — Gold firmed on Monday as the greenback softened, although trading was thin due to the US holiday and as markets awaited details on President Donald J. Trump’s tax policy.

Market activity is likely to be largely subdued until guidance on the pace of interest rate hikes from a raft of Federal Reserve speakers this week.

Gold is highly sensitive to rising US rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.

Liquidity was thin due to the Presidents Day holiday in the United States.

Spot gold was up 0.20% at $1,238 an ounce by 2:49 EST (1949 GMT), while US gold futures for April delivery traded slightly lower at $1,238.50.

“We have settled into a $1,220-1,245 range, with activity expected to be light on Presidents Day,” said Saxo Bank’s head of commodity strategy Ole Hansen.

“President Trump will continue to be a key source of market inspiration. Trump’s address to the joint session on Capitol Hill next Tuesday may become the next focus considering he is expected to lift the curtain on his tax cuts ideas.”

The dollar has lost some support in recent weeks as a lack of concrete detail dampened post-election euphoria over Mr. Trump’s commitment to cutting taxes, easing regulation and boosting spending.

The euro edged higher against the dollar after a slide in US bond yields, shrugging off worries over upcoming French elections.

Wednesday is likely to be most important day of the week — certainly for the dollar — due to the release of the Federal Open Market Committee’s last meeting minutes, said Fawad Razaqzada, technical analyst for Forex.com. The heads of five regional US Federal Reserve banks are scheduled to speak this week. In addition, Fed Board Governor Jerome Powell appears on Wednesday, when minutes of the last policy meeting are also due. Speaking in Singapore on Monday, Cleveland Fed chief Loretta Mester said she would be comfortable raising rates at this point if the economy kept performing the way it had.

Investor appetite has shown signs of easing since gold hit a three-month high on Feb. 8. The world’s largest goldbacked exchange- traded fund, SPDR Gold Shares, reported an outflow of 2.4 tons on Friday, the first in nearly four weeks. Data also showed on Friday that speculators cut their net long position in COMEX gold for the first time in three weeks in the week to Feb. 14.

“Whether investors continue to rotate away from non-yielding gold and towards risk assets depends on how soon details of President Trump’s fiscal stimulus plans become clearer, but overall the equity rally looks to have further to run,” Mitsubishi said in a note.

Among other precious metals, silver was up 0.40% at $ 18.04 an ounce. Speculative financial investors have played a major part in the 13% rise in the silver price since the beginning of the year, Commerzbank said in a note.

Platinum was 0.05% lower at $1,000.50 and palladium was down 0.50% at $771.50. Earlier in the session, palladium dipped to a more than one-week low of $766. —