Gold prices were steady on Tuesday as the dollar remained under pressure on signs that United States President Donald Trump would adopt a protectionist stance on trade.
Spot gold was mostly unchanged at $1,217.42 per ounce by 0337 GMT, after hitting their strongest since Nov. 22 at $1,219.59 earlier in the session.
U.S. gold futures inched up 0.2 percent, to $1,218.
Trump formally withdrew the U.S. from the Trans-Pacific Partnership trade deal on Monday and told U.S. manufacturing executives he would impose a hefty border tax on firms that import products after moving American factories overseas.
“We are looking at gold hitting $1,250 within weeks. The rationale is very simple. The market was in honeymoon with Trump. With him in power now, the reality starts to bite,” said Dominic Schnider of UBS Wealth Management in Hong Kong.
“The market starts to realize the euphoria on how he starts to accelerate the growth and is disappointed. Maybe his policies are inflationary rather than growth supportive.”
Trump’s nominee for Treasury Secretary Steven said that an excessively strong dollar was negative in the short term, according to a report by Bloomberg on Monday. That put additional pressure on the dollar.
The dollar index, which measures the greenback against a basket of currencies, fell for a third day by 0.2 percent to 99.930.
Trump’s campaign calls for tax cuts and more infrastructure spending have boosted U.S. shares and the dollar, as well as driving a selloff in U.S. Treasury bills, but his protectionist statements and a flurry of off-the-cuff Tweets have kept many investors from adding to risky positions.
“Regardless of Trump, the main story for gold is negative interest rates in the U.S. We are not expecting the Fed to raise rates in March and it’s just going to be two hikes and that’s roughly priced in to the market,” Schnider said.
Spot gold looks exhausted and may again fail to break a strong resistance at $1,219 per ounce before retracing towards a support at $1,196, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver was flat at $17.19 per ounce while platinum gained 0.5 percent, to $983.35.
Palladium dropped by 0.6 percent to $771.80 an ounce, after hitting $795.60, its highest since May 2015, in the previous session.