Investing.com – Gold prices bounced off session lows, buoyed a slump in the dollar as U.S. political uncertainty resurfaced, after the Senate’s decision to delay a vote on a healthcare bill raised fresh doubts about President Trump’s ability to deliver on his pro-growth economic agenda.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell by $3.67, or 0.29%, to $1,250.57 a troy ounce.
A slump in the dollar to eight-month lows against its rivals boosted demand for dollar-denominated gold, as traders sought safe haven protection from U.S. political uncertainty, after the Senate delayed a vote on a healthcare bill to repeal and replace Obamacare.
President Donald Trump has reiterated several times that healthcare reform would need to be passed before his administration moves ahead with tax reform, which is widely viewed as a pro-economic growth measure.
Dollar-denominated assets such as gold are sensitive to moves in the dollar – A dip in the dollar makes gold cheaper for holders of foreign currency and thus, increases demand.
Gains in gold, however, remained stifled by expectations that the Federal Reserve will deliver a third rate hike later this year, after hiking rates for the second time earlier in June, despite a slowdown in inflation.
Some analysts believe that the next set of inflation data slated for Friday, June 30, will be key in determining if the Fed can deliver on its promise of three hikes this year.
“…the FOMC does not take the recent inflation developments lightly, and though it believes the near-term weakness will prove to be transitory, inflation data is front and center and will be key in determining if the Fed can deliver on its promise of three hikes this year.” Morgan Stanley said in research note to clients.
In other precious metal trading, silver futures gained 1.05% to $16.762, a troy ounce while platinum futures rose by 0.28% to $923.50.
Copper traded at $2.638, up 0.51%, while natural gas, added 3.02%, rising to $3.099.