LONDON: Gold was on track for its fourth straight session of gains on Thursday as the dollar skidded to its lowest in two weeks on concerns about the impact of high levels of U.S debt and tax cuts.
Spot gold was steady at $1,351.27 an ounce by 1255 GMT after earlier hitting its highest since Jan. 25 at $1,357.08. It had risen 1.6 percent on Wednesday, its highest one-day gain since May 2017.
US gold futures were down 0.3 percent at $1,351.10 per ounce.
"We are back to what was driving gold prior to that little spike in volatility last week which is the direction of the dollar and the longer term direction of U.S debt and how it's going to be serviced," ICBC Standard Bank analyst Tom Kendall said.
The dollar index
against a basket of currencies was down 0.4 percent at 88.768, after earlier hitting a near two-week low of 88.585.
A recovery in broader risk sentiment was also seen weighing on the dollar, which gained during this month's market turmoil.
The US currency has been hit by several setbacks this year, ranging from the possibility Washington might pursue a weak dollar strategy to the perceived erosion of its yield advantage as other countries end their easier monetary policy.
Concerns about the growing US fiscal deficit have also weighed on the currency.
Inflation fears boost gold, which is seen as a safe haven against rising prices. But expectations that the US Federal Reserve will raise interest rates to fight inflation make gold less attractive since it is not interest-yielding.
BMI Research was neutral on gold prices because of mixed signals from wider financial markets, it said in its gold outlook.
"Key resistance for prices comes in around the 2016 high of $1,375 per ounce and we would have to see this level decisively broken before calling for significant near-term gains," the research group said in a note.
Among other precious metals, silver was down 0.1 percent at $16.85 an ounce after earlier hitting a more than one-week high of $16.98.
Palladium was 1.7 percent higher at $1,017, after earlier hitting a one-week top of $1,020.90.
latinum was up 0.6 percent at $1,001.90, after earlier hitting $1,007.10, its highest in two weeks.
The platinum market is set for another surplus this year after recording oversupply in 2017, Johnson Matthey said in a report on Wednesday, although its sister metal palladium is tipped to see another deficit.
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