Gold rebounds as dollar weakens, US health care reform vote postponed

NEW YORK/LONDON — Gold rose on Tuesday after hitting a six-week low in the previous session as bargain hunting set in and the dollar slid sharply after the US Senate postponed a planned health care vote.

US Federal Reserve Chair Janet Yellen said she was sticking to the plan to raise interest rates gradually and that inflation continued to run below Fed targets.

The US dollar index fell by 1% and Wall Street dropped further, after a vote on health care legislation was delayed in the US Senate, according to a Senate aide.

Spot gold rose 0.50% to $1,249.51 per ounce by 3:28 p.m. EDT (1928 GMT). It slumped to a six-week low of $ 1,236.46 on Monday.

US gold futures for August settled up 0.04% at $1,246.90.

“Maybe gold was anticipating a much harder stance from Yellen and that’s why we’re rallying slightly rather than continuing the sell off,” said Phillip Streible, senior commodities broker for RJO Futures in Chicago.

“The dollar’s so weak, that also is lending some support on the gold market. Gold still likes that level of $ 1,250. That’s the pivot point right there.”

A huge sell order totaling 1.85 million ounces pushed gold to a six-week low on Monday, although the precious metal ultimately failed to break below the 200-day moving average.

“If yesterday gold wasn’t able to push below the 200-day moving average that’s a positive sign,” said ABN Amro analyst Georgette Boele.

“The market is skeptical about Fed rate rises this year and next. Overall we’re optimistic about the outlook for gold, we (see) a weaker dollar later in the year,” she added.

The dollar was already weak against the euro after the European Central Bank president said he might begin to reduce the monetary authority’s emergency economic stimulus.

A weak dollar makes dollarpriced gold cheaper for non- US investors.

Prices of gold have gained every month this year save June, due partly to geopolitical tensions which most recently included Syrian hostilities, a bailout of Italian banks, the policies of US President Donald J. Trump and the United Kingdom’s negotiations to exit the European Union.

“The gold market is seeing a bit of a bid right now. Growing tensions in the Middle East may be playing a part,” said INTL FCStone’s Ed Meir in a note.

Among other precious metals, silver rose 0.80% to $16.69 an ounce, while palladium fell 0.60% to $860 per ounce.

Platinum rose 0.80% to $919.45, recovering from Monday’s sixweek trough. —