Gold rides on US tax cut plan fears

NEW YORK/LONDON — Gold rose on Wednesday, hovering near a three-week high as the dollar retreated on expectations of possible delays in long-awaited US tax reforms, while palladium hit its highest since 2001.

Spot gold was up 0.60% at $ 1,283.20 an ounce by 2:00 p.m. EST (1900 GMT). US gold futures for December delivery settled up $7.90, or 0.60%, at $1,283.70 per ounce.

US House of Representatives Speaker Paul Ryan left the door open to a possible delay in implementing lower tax rates for corporations, following a media report that his fellow Senate Republicans were exploring the option.

US equities fell and the dollar index, which measures the greenback against a basket of six currencies, dipped 0.10% toward three-and-ahalf month lows touched in recent weeks.

“The closer we get to the interest rate hike in December the lower the price of gold should get,” said Natixis precious metals analyst Bernard Dahdah.

A December interest rate hike has been priced into the market, traders said.

But a potential delay in the tax plan could mean a moderation in interest rate increases next year, which could support gold, they noted.

“If (Republicans) can’t get something done, you could see more of a bid come back into gold,” said Josh Graves, senior market strategist at RJO Futures in Chicago.

Rising US interest rates tend to boost the dollar and lift the opportunity cost of holding non-yielding assets such as gold.

In physical demand, industry off icials and analysts warned that India’s gold imports in the last quarter of 2017 could drop 25% from a year ago due to weak demand during key festivals and as investors seek better returns from riskier assets like equities.

In other precious metals, palladium was up 2.40% at $1,016 an ounce, silver increased by 0.90% at $17.11 an ounce while platinum rose by 1.20% at $933.60 an ounce. —