Gold prices were little changed Tuesday amid a steady dollar, with investors considering the potential impact of a sweeping tax legislation in the United States that Congress appeared all but certain to pass this week.
Spot gold was steady at $1,261.41 an ounce as of 0346 GMT, while U.S. gold futures were down 0.1 percent at $1,264.80 an ounce.
Two Senate Republican holdouts agreed on Monday to support the tax overhaul backed by President Donald Trump, with the House of Representatives set to vote on Tuesday and the Senate either later on Tuesday or on Wednesday.
The dollar remained mired in its recent ranges, as optimism that the bill would pass dueled with concerns about what its ultimate effect on growth would be.
“I would expect the dollar to move higher ahead of the passage of the bill and then move lower as investors assess the impact on the U.S. economy,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
There was also some potential for gold prices to rise on short-covering, he added.
Optimism surrounding the bill has also helped equities surge to record highs.
“We are somewhat wary about gold’s upside potential here and would not be buying it at current levels as we think there are more reasons working against it at this stage than for it,” INTLFCStone analyst Edward Meir said.
“Higher equities, surging bitcoin prices, and the possibility that the tax bill could trigger a modest short-term uptick in both the dollar and U.S yields” could weigh on gold, Meir added.
Even as the Congress moved closer to the tax reform, outgoing Federal Reserve Chair Janet Yellen last week gave a more sobering assessment of its impact, saying a short-term bump is likely, but a longer-term boost is not.
“We expect prices to work higher through the headwind of firmer U.S. monetary policy and expect there will be further bouts of safe-haven buying on the back of the North Korea situation. We expect spot gold prices to trade in a $1,190 to $1,390 per ounce range in 2018,” Scotiabank analysts said in a note.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.8 percent to 837.20 tonnes on Monday.
In other precious metals, silver and platinum were both nearly unchanged at $16.12 and $906.24 an ounce, after rising to their highest in nearly two weeks in the previous session.
Palladium was up 0.2 percent at $1,020.15 an ounce.