Gold slips as greenback strengthens after US tax proposal advances

NEW YORK/LONDON — Gold prices fell on Monday toward the four-week lows hit last week as the US dollar strengthened after the US Senate approved a major tax overhaul and the market looked ahead to a meeting of the Federal Reserve later this month.

Spot gold was down 0.50% at $1,274.16 an ounce by 1:50 p.m. EST (1850 GMT), not far from last Thursday’s $ 1,270.11, its lowest level since Nov. 6.

US gold futures for February delivery settled down $ 4.60, or 0.40%, at $1,277.70 per ounce.

The dollar was lifted by expectations that US tax cuts would boost economic growth, which could fuel inflation and reinforce the case for higher US interest rates when the US central bank meets on Dec. 12-13.

The US Senate approved a tax reform bill on Saturday, moving President Donald Trump a big step closer to his goal of cutting taxes for businesses and the rich while offering everyday Americans a mixed bag of changes.

“The tax proposal would be bad for gold because it is expected to increase growth in the US, making the Fed more likely to increase interest rates. Higher rates are bad for a non-yielding asset like gold,” said Ryan McKay, commodity strategist at TD Securities in Toronto.

The US Senate’s and House of Representatives’ separate forms of the tax bill still must be reconciled.

Uncertainty over whether this can be done in a timely manner and tensions over North Korean missile tests gave gold underlying support, McKay said.

Concerns over an investigation into former US national security adviser Michael Flynn’s contact with Russia’s US ambassador during Mr. Trump’s election campaign also gave gold underlying support, he added.

“There is a negative influence coming from other commodities like oil, the dollar is stronger and risky assets are up,” said Quantitative Commodity Research consultant Peter Fertig.

Lower oil prices could mean subdued price pressure, which is a negative for gold, often used as a hedge against inflation.

Gold has been stuck in a $ 1,270-$ 1,300 range this year, traders said. Strong technical support for gold is around $1,266 at the 200-day moving average, while resistance kicks in at about $ 1,283 near the 21- and 55- day moving averages.

In other precious metals, silver slipped 0.80% to $16.31 an ounce, after dipping to $16.22, the last session’s low.

Platinum was down 1.33% at $925, touching a nearly two-week low of $918.

Palladium dropped 2.30% to $996.50 an ounce, hitting $993.97, a one-week low. —