Gold prices rose to a three-week high on Wednesday as risk-averse investors dumped equities amid a weaker dollar and sought safe havens on growing doubts about US President Donald Trump's economic agenda. Spot gold had risen 0.3 percent to $1,247.56 per ounce by 0644 GMT, after touching a three-week peak of $1,248.47. US gold futures were firm at $1,246.30.
"It seems that equity investors decided to take some money off the table, perhaps getting slightly wary about the progress in President Trump's legislative agenda," INTL FCStone analyst Edward Meir said. "Gold will likely continue to rally going into Wednesday's session as Tuesday's US stock market selloff was significant and will likely have a knock-on effect on international equity markets over the next 24 hours."
Gold has rallied nearly $50 from last Wednesday's low following a less hawkish policy statement from the US Federal Reserve. "The re-positioning of investors since the FOMC 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.
The lack of a concrete policy from the Trump administration is worrying investors and more people will opt for gold as a safe-haven investment when the stock markets go lower, analysts and traders said. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.50 percent to 834.40 tonnes on Tuesday from 830.25 tonnes on Monday.
Holdings rose 4.15 tonnes on Tuesday after three straight sessions of outflows, underpinning investors' interest in the metal. "Gold looks well positioned for a test above resistance at$1,248-$1,250," MKS PAMP Group trader Sam Laughlin said.
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