Investing.com – Gold prices fell on Friday amid a sharp rise in the dollar on growing expectations of tax reform after the Senate approved the Republican-backed budget.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange fell $7.64, or 0.60%, to $1,282.28 a troy ounce.
Gold prices struggled to pare losses as sentiment on the dollar turned positive on signs of tax reform bolstered investor expectations of a fiscal lift to the economy amid housing data that topped forecasts.
The Senate approved the Republican-back budget on Thursday, a crucial step forward for tax reform, allowing Republicans to move ahead with tax cuts without support from Democrats.
Tax reform is widely expected to have an inflationary impact on the economy boosted the greenback, lowering demand for dollar denominated commodities such as gold.
Also weighing on gold prices were signs of improvement in economy the after existing home sales rose 0.7% to a seasonally adjusted annual rate of 5.39 million units last month, The National Association of Realtors said on Friday.
Some analysts warned gold prices could come under increased pressure as the precious metal is likely to test key support levels.
"We seem to once again be ready to test technical support around $1,275-$1,270," said Mitsubishi analyst Jonathan Butler. "If we look at the chart, it's a classic head and shoulders pattern here and the danger is we'll break lower to a level at $1,250 or even below."
In other metals trading, silver futures fell 1.14% to $17.06 while platinum futures added 0.02% to $926.
Natural gas rose by 1.67% to $2.92, while Copper traded at $3.17, down 0.02%.