Gold climbed to a three-week high on Wednesday as the dollar fell to seven-week lows and bond yields sank on uncertainty over the economic policies of US President Donald Trump. Spot gold was up 0.4 percent at $1,249.98 an ounce by 2:43 pm EDT (1843 GMT), close to the session high of $1,251.26, the highest since February 28.
US gold futures settled up 0.3 percent at $1,249.70. Trump and Republican congressional leaders appeared to be losing the battle to get enough support to pass their Obamacare rollback bill. Mark Meadows, who heads the conservative House Freedom Caucus, said his group had more than enough members to stop the bill from passing. The current House Republican rollback plan is scheduled for a floor vote on Thursday.
"I think that's giving the market more clarity that it's probably not going to be passed, and they're reacting to that," said Ryan McKay, associate commodities strategist for TD Securities in Toronto. "This could keep the Fed more measured regarding the pace of rate hikes, which has seen yields, US dollar, and equities fall off while gold rallies." A lack of concrete policy from the Trump administration is increasing gold's attraction as a safe-haven investment, analysts and traders said.
Most US and European share indexes fell or were little changed, while the greenback extended losses to a seven-week low against a basket of major currencies, on concerns over potential delays to Trump's pro-growth policies unnerved investors. Gold was also supported by a further drop in US Treasury yields, with the 10-year benchmark yield dipping to the lowest since February 28. Gold has rallied around $50 from last Wednesday's low and clocked its longest winning streak since early January after a less hawkish tone on interest rates in the US Federal Reserve's latest policy statement last week.
"The repositioning of investors since the (Fed) meeting continues unabated, with investors becoming less bearish as a result of the subdued outlook for rates in 2018," ANZ analysts said in a note. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.5 percent to 834.40 tonnes on Tuesday after three sessions of outflows. The gold market shrugged off what police called a terrorist incident in London. In other precious metals, spot silver turned up 0.06 percent at $17.51 an ounce, while platinum fell 0.8 percent at $959. Palladium eased by 0.06 percent to $786.50 after hitting $794.30, its highest since February 17.
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