Gold was steady on Tuesday, after falling from a 3-1/2-month high in the previous session, as investors awaited a speech by U.S. President Donald Trump later in the day for more clarity on his economic policy.
Spot gold was little changed at $1,252.90 per ounce at 0241 GMT. The metal hit its highest since November 11 at n$1,263.80 in the previous session on Monday.
U.S. gold futures fell 0.4 percent to $1,253.80.
Investors are looking towards Trump’s political speech to a joint session of Congress on Tuesday night where he is expected to provide clues on his plans to cut taxes.
“We will have to see what happens later tonight and through Wednesday post Trump’s address, but we suspect that any “Trumpflation” type of reaction will be relatively short-lived,” said INTL FCStone analyst Edward Meir.
“Many of the proposals need to be translated into actual legislation and also need congressional approval…it is unclear whether there exists enough support, even in the Republican Party, to push through much of Trump’s agenda,” Meir said.
Trump said on Monday he would propose a budget that would ramp up spending on defense, but seek savings elsewhere to pay for it.
“A possible setback could set in (gold) over the next 24 hours, but we still could end the week on a firmer note, especially if Janet Yellen’s testimony on Friday lays open the possibility that the Fed will likely pass on a rate move in March,” Meir said.
A delay in an interest rate hike by the U.S. Federal Reserve would be positive for non-interest bearing bullion while also keeping the dollar weaker, making the dollar-denominated yellow metal more appealing to buyers paying in other currencies.
However, there are still some Fed officials pushing for a rate increases as soon as next month.
The U.S. central might need to raise interest rates in the near future to avoid falling behind the curve on inflation, Dallas Fed President Robert Kaplan said on Monday.
Prices of U.S. short-term interest rate futures fell on Monday as traders raised their expectations the Fed will increase rates either in March or May after Kaplan’s comments.
“Persistent speculation about Greek fiscal policy and looming elections in the Netherlands and France are contributing to the geopolitical uncertainty on the part of the European continent,” Heraeus Metal Management said in a note.
“We continue to see gold well supported – overcoming resistance at $1,249 per ounce may suggest higher prices. We see the next resistance level at $1,278 and also the $1,300 mark is moving into the sight of investors,” he further noted.
Spot gold still targets $1,278 per ounce, following its break above a resistance at $1,249, Reuters Technical analyst Wang Tao said.
Spot silver rose 0.4 percent to $18.31 an ounce. The metal hit a 3-1/2-week high at $18.48 in the previous session.
Platinum was firm at $1,031 per ounce, after touching a five-month high at $1,044.10 in the prior session.
Palladium was also firm at $779.50 per ounce.