Investing.com - Gold prices were moderately higher on Wednesday, but gains were expected to remain limited as upbeat U.S. employment data and optimism over a major U.S. tax plan continued to support demand for the dollar.
Comex gold futures was up $3.30 or about 0.26% at $1,268.30 a troy ounce by 08:40 a.m. ET (12:40 GMT), just off the previous session's six-week lows of $1,263.20.
The greenback found support after data showed that the U.S. private sector added 190,000 jobs in November.
The dollar was already supported since the U.S. Senate passed a tax overhaul package over the weekend amid expectations that tax cuts for corporations will stimulate the U.S. economy.
Some investors also believe the boost to the economy will prompt the Federal Reserve to raise interest rates at a faster pace.
Republicans are aiming to send a final tax bill to the White House before Christmas, with the House and Senate working to reconcile separate versions of the plan.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 93.32.
Gold is sensitive to moves in both U.S. rates and the dollar. A stronger dollar makes gold more expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.
However, investors grew a little more cautious due to the possibility of a U.S. government shutdown if lawmakers fail to reach a budget agreement this week. Government funding is set to expire Friday.
Elsewhere on the Comex, silver futures were up 0.17% at $16.09 a troy ounce.
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