Gold prices nudged higher on Wednesday, as the dollar slipped following a media report that suggested a delay in the implementation of a major corporate tax cut under a crucial US tax reforms plan.

Spot gold was up 0.2 per cent at $1,278.43 per ounce as of 0805 GMT. It fell about 0.5 per cent on Tuesday. US gold futures for December delivery gained 0.3 per cent to $1,279 an ounce.

Senate Republican leaders are considering a one-year delay in implementing the centrepiece tax cut to comply with Senate rules, the Washington Post had reported on Tuesday, citing unidentified sources.

Republicans, who hold a slim majority in the US House of Representatives, had forged ahead on Tuesday with legislation to reshape the US tax code, which the Democrats have blasted as a give-away to corporations and the rich.

Senate Republicans are expected to unveil their own tax zbill at the end of the week, and early indications suggest it could differ significantly from the House legislation.

“Gold began on the front foot this morning with the dollar sold off aggressively...,” MKS PAMP trader Alex Thorndike said in a note.

The dollar index , which measures the greenback against a basket of six currencies, fell 0.1 per cent. “$1,280-85 remains the ceiling for now and it will be interesting to see whether this Washington Post article can generate some upward momentum today in Europe and New York," Thorndike said.

Anti-graft purge

An anti-graft purge in Saudi Arabia and U. President Donald Trump's visit to South Korea amid tensions with the North could boost the prices of the yellow metal, analysts said.

“While the fundamentals are showing that gold prices should fall into 2018, these geopolitical events could cloud the fundamentals,” OCBC analyst Barnabas Gan said.

Trump said on Wednesday the United States would defend itself and its allies against Pyongyang's nuclear threat, warning its leader that nuclear weapons it is developing “are not making you safer, they are putting your regime in grave danger".

Saudi Arabia's anti-corruption campaign, led by Crown Prince Mohammed bin Salman, is being seen by critics as a populist power grab, but as an overdue attack on the sleaze of a moneyed ultra-elite by ordinary Saudis.

“The fact that oil has now broken out on the charts bodes well for further gains and gold could get pulled up with crude," said INTL FCStone analyst Edward Meir.

Oil prices fell on Wednesday although traders said the overall market remains well supported. Benchmark Brent crude rose to an over two-year high of $64.65 earlier this week.

Spot gold has turned neutral in the $1,263-$1,281 range, following its failure to break a resistance at $1,281 per ounce, according to Reuters technical analyst Wang Tao.

In other precious metals, silver rose 0.4 per cent to $17.02 an ounce. Platinum was up 0.5 per cent at $927.30 an ounce, while palladium gained 0.3 per cent to $995.70 per ounce.

Related Topics
comment COMMENT NOW