LONDON: Gold fell 1% on Wednesday, after earlier climbing to a near two-month high, as the dollar pared losses, while investors focused on the outcome of the US Senate run-off election in Georgia.
Spot gold was down 0.8% to $1,934.72 per ounce at 1353 GMT, having earlier hit a near two-month peak at $1,959.01. US gold futures dipped 0.9% to $1,937.20.
“Given gold’s moves in the last couple of days and just how overextended the dollar decline looks, we could just be seeing some profit taking and a bit of a technical correction,” said OANDA analyst Craig Erlam.
“Gold has traded at notable resistance over the last couple of days around $1,950-1,960 and we may just be seeing a pullback.”
The dollar index recouped losses from a dive to 2-1/2-year lows, making gold a relatively less attractive bet for those holding other currencies.
Also weighing on gold were higher US Treasury yields, which increase the opportunity cost of holding non-interest bearing bullion.
However, gold remains supported as an inflationary hedge, with investors anticipating additional fiscal stimulus as the Democrats take a lead in runoff votes that will determine control of the US Senate.
“Whether (the policies) turn into (something) productive down the line remains to be seen, but clearly they’re going to be adding considerable debt onto considerable debt, and that’s good for gold,” said Ross Norman, an independent analyst.
Meanwhile, minutes of the US Federal Reserve’s Dec. 15-16 policy meeting are due at 1900 GMT.
The Fed might decide to unleash more stimulus once it has a clearer picture on how the US Congress turns out, said Howie Lee, an economist at OCBC Bank.
In other metals, silver fell 1% to $27.31 an ounce. Platinum dipped 1.5% to $1,095.10, while palladium was down 0.6% to $2,451.26.
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