Gold slips, but Trump tax reform doubts cap losses
Gold prices edged down on Thursday on ebbing geo-political worries but scepticism over U.S. President Donald Trump’s proposed tax reform curbed further losses.
Spot gold was down 0.2 percent at $1,266.94 per ounce, as of 0406 GMT. Bullion prices edged away from a two-week low of 1,259.90, hit during the session on Wednesday.
U.S. gold futures climbed 0.3 percent to $1,268.30 an ounce.
“Gold is being pulled down by descending global risk sentiment… But the market is still worried about whether (U.S. tax cut) policy would be carried out, as the rate cut is too steep but there are not many fiscal supplies to compensate to this policy,” a trader with a Shanghai-based bullion bank said.
President Donald Trump unveiled a one-page plan on Wednesday proposing deep U.S. tax cuts, many for businesses, that would make the federal deficit balloon if enacted, drawing a cautious welcome from fiscal conservatives and financial markets.
“I think they are trying to attract business to the U.S., which is good for the economy and stock market, and thus a negative impact towards the gold price,” said Spencer Campbell, general manager with Kaloti Precious Metals in Singapore.
“We have to see whether or not he could pass the bill… sentiment would be driven the other way should he not be able to pass that bill.”
The Trump administration said on Wednesday it aimed to push North Korea into dismantling its nuclear and missile programs through tougher international sanctions and diplomatic pressure, and remained open to negotiations to bring this about.
Gold has, however struggled to make effective rallies as the previous week’s geopolitical tensions fade from traders’ minds, said Jeffrey Halley, senior market analyst, OANDA.
“From a technical perspective, gold still appears to be setting itself up for a meaningful correction lower with nearby support at $1,254, the 200-day moving average.”
Spot gold still targets $1,249 per ounce, as it has pierced below a support at $1,265, according to Reuters technical analyst Wang Tao.
The markets awaited the European Central Bank’s upcoming monetary policy decision, where it is set to keep its ultra-easy policy stance firmly in place but may acknowledge better growth prospects, setting the stage for a small signal as early as June about an eventual reduction of stimulus.
Silver slipped 0.1 percent to $17.44 an ounce, after hitting its lowest in over a month in the previous session.
Platinum gained 0.1 percent to $948.10 an ounce and palladium remained unchanged at $808 an ounce.
(Reporting by Swati Verma in Bengaluru; Editing by Sherry Jacob-Phillips)