Gold prices hit a more than two-week high on Tuesday, supported by expectations of stronger demand from the physical market and as the dollar fell on fading prospects of an imminent increase in US interest rates. The dollar sank to a 10-month low against a basket of currencies, making dollar-denominated metals cheaper for holders of other currencies, which could boost demand.
The greenback sank on reduced confidence in US President Donald Trump's agenda and jitters over hawkish central banks abroad. Spot gold was up 0.7 percent at $1,242.41 an ounce by 2:15 pm EDT (1815 GMT), having touched $1,244.30, its highest since June 30. US gold futures settled 0.7 percent to $1,241.90.
"The Senate's failure to repeal Obamacare has amplified concerns that the Trump economic agenda will be more difficult to implement even though the GOP holds a tenuous majority in Congress," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.
Data from consultancy GFMS shows India's gold imports climbed to an estimated 75 tonnes in June from 22.7 tonnes a year earlier. For the first half of the year imports rose to 514 tonnes, up 161 percent year on year. GFMS analysts said the jump was caused by Indian consumers buying ahead of July's increase in the goods and services tax on gold to 3 percent from 1.2 percent.
However, investors are still retreating from physical gold. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, slipped to 827.07 tonnes on Monday, down from 828.84 tonnes on Friday. Meanwhile the price of silver gained 1.4 percent to $16.29 an ounce after touching a two-week high at $16.34. Platinum gained 0.7 percent to $927.5 while palladium slipped by 0.02 percent to $864.85.
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