Gold fell after tapping a 3-1/2-month high on Monday as US Treasury yields rose and investors waited for US President Donald Trump to outline plans for tax cuts, infrastructure spending, levies on imports and foreign policy. Spot gold turned down 0.1 percent to $1,255.22 an ounce by 2:43 pm EST (1943 GMT), after rising to $1,263.80, the highest since November 11, but prices failed to hold above the 200-day moving average at $1,260.74.
US gold futures settled up 0.04 percent at $1,258.80. Trump is due to address Congress on Tuesday. "What he reveals might be important for gold. For example, if he announces significant fiscal easing, that would raise inflation expectations and lead investors into gold," said Danske Bank analyst Jens Pederson.
"But the border adjustment tax (import tax) could push the dollar higher and that could be negative for gold ... The whole area of foreign policy may mean more political uncertainty and that's positive for gold." Bullion prices briefly rose to 3-1/2-month highs after Trump said he would propose a budget that would ramp up spending on defence, but seek savings elsewhere to pay for it. Holdings of the largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, have also risen more than 5 percent this month.
Spot silver fell 0.3 percent to $18.29 an ounce, after rising to $18.48, the highest since November 11.
Platinum gained 0.4 percent at $1,026.99, after jumping to a five- month high at $1,044.10. Palladium rose 1.7 percent to $781.25. Societe Generale sees robust demand for palladium auto catalysts from Chinese car manufacturers. "The average palladium loading on a Chinese gasoline car is set to grow again as Chinese standards for light duty gasoline vehicles are implemented nationally," said Societe Generale analyst Robin Bhar.