Gold prices edged higher on Tuesday, after hitting a one-month high in the previous session, buoyed by political uncertainty in the United States, as investors awaited the Federal Reserve meeting for clues on monetary policy.

Investors also braced for possible hints on when the next interest rate hike is coming, ahead of the Fed's rate-setting two-day committee meet starting on Tuesday.

“While no rate hike is expected, the market is likely to remain subdued leading into the meeting,” analysts at ANZ Research said in a note.

Spot gold was up 0.2 per cent at $1,256.71 per ounce, as of 0626 GMT. In the previous session, it touched $1,258.79 an ounce, its highest since June 23. US gold futures for August delivery climbed as much as 0.2 per cent to $1,257.00 per ounce.

“We remain cautiously constructive on gold as we see no end to dollar's weakness for the moment given the ongoing political dramas in Washington and the approaching deadline to extend the debt ceiling,” said INTL FCStone analyst Edward Meir.

The US dollar languished near a 13-month low against a basket of currencies on Tuesday, with traders sceptical that this week's US Federal Reserve meeting would do much to alter the greenback's recent weak trend.

The greenback was also clouded by worries that persistent political disorder would present obstacles to US President Donald Trump's stimulus and tax reform agenda.

“There seems to be very little progress being made on a number of 'pro-growth' Trump initiatives, all being net bullish for gold,” Meir added.

The Republican Party's repeated failures to overhaul the healthcare system, multiple congressional and federal investigations into Trump's campaign ties with Russia have cast a shadow over his first six months in office.

Trump's son-in-law, Jared Kushner, on Monday told Senate investigators he had no part in any Kremlin attempt to meddle in the US election despite having met Russians four times last year.

“Gold will remain supported in the short term by a weaker dollar and safe-haven buying,” said OCBC analyst Barnbas Gan.

Gold is often seen as an alternative investment during times of political and financial uncertainty. “Spot gold may test a support at $1,250 per ounce, a break below which could open the way towards the next support at $1,239,” according to Reuters technical analyst Wang Tao.

Silver prices climbed as much as 0.1 per cent to $16.46 per ounce, after hitting their highest since July 3 at $16.59 on Monday.

Platinum gained up about 1 per cent to $934.60 per ounce. In the previous session, it hit its highest in more than five weeks at $940.40 an ounce. Palladium advanced 0.8 per cent to $854.90 per ounce

Related Topics
comment COMMENT NOW