Gold edged higher on Monday as uncertainty over US tax legislation weighed on the dollar, while an analyst said bullion might face renewed headwinds early next year. Platinum rose 2 percent as investors recovered short positions. Spot gold was up 0.53 percent at $1,261.87 an ounce by 1:40 pm EST (1840 GMT) after hitting $1,263.98, its highest since December 6.
US gold futures for February delivery settled up $8, or 0.6 percent, at $1,265.50 per ounce. Platinum rose 1.8 percent to $909.25 an ounce after rising to $915, its highest since December 6.
The dollar index fell, making bullion denominated in the greenback cheaper for buyers using other currencies, as concerns grew over whether the proposed US tax code overhaul would have a major impact on economic growth. "If (the tax bill) were to pass, we think the gold price would fall lower," said Rob Haworth, senior investment strategist for US Bank Wealth Management. "That has to do with stronger growth, more room for the Fed to normalize interest rates. That should create a headwind for investors."
Top US Republicans expect Congress to pass the bill this week, with votes in the House of Representatives and Senate as early as Tuesday. A final bout of dollar strength could hit gold into 2018, sending prices down $25 to $50, but then it should recover, said analyst Carsten Menke of Julius Baer in Zurich.
In other precious metals, platinum reached a 1-1/2-week high. "Platinum was trending significantly lower, got a little oversold and right now, it's covering of short positions," a New York-based trader said.
Having risen 1.7 percent during the last session, platinum is on track for its biggest two-day rally since January. Silver was up 0.4 percent at $16.12 an ounce after rising to a nearly two-week high of $16.17. Palladium fell 0.6 percent to $1,017 an ounce.