Investing.com – Gold prices edged higher on Tuesday, benefiting from a slump in the dollar to eleven-month lows, as investors’ fears grew that tax reform could be delayed, following the collapse of a health care bill aimed at replacing Obamacare.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange rose by $7.37, or 0.61%, to $1,241.18 a troy ounce.
Gold futures capitalized on a slump in the dollar, hitting three-week highs as investors questioned President Trump’s ability to deliver on tax reform, after a health care bill aimed at replacing Obamacare failed to garner enough votes.
President Trump has reiterated several times that health care reform needed to pass before his administration would proceed on to tax reform.
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.
Investor sentiment on gold has turned positive in recent weeks amid narrowing expectations that the Federal Reserve will keep to its plan to hike rates at least once more this year, after recent economic data failed to show any improvement in inflation.
Some analysts believe gold’s gains could be capped as other central banks appeared to be edging closer towards tightening monetary policy. The Bank of Canada raised interest for the first time in seven years last week.
…the “rising prospects of tighter global monetary policy may dampen the metal’s allure this quarter,” Lukman Otunuga, research analyst at FXTM said.
In other precious metals, silver futures rose 0.96% to $16.254 a troy ounce while platinum futures dropped 0.08% to $929.55.
Copper traded at $2.728, up 0.15%, while natural gas, tacked on 1.82% to trade at $3.075.