Gold prices held steady on Tuesday as investors looked to see if US President Donald Trump would be able to enact promised tax cuts and infrastructure spending, with the dollar drifting slightly higher off of multi-month lows. Spot gold was mostly unchanged at $1,253.83 per ounce at 0557 GMT, after touching its highest in a month at $1,261.03 the day before. US gold futures inched down 0.2 percent to $1,253.60.
"The markets are now starting to settle down as concerns around the implications of the failed (US) healthcare bill seem to have somewhat abated," said ANZ analyst Daniel Hynes. "We're likely to see gold prices relatively steady for now until there is a little bit more clarity on Trump's other policies, particularly over the tax bill." Trump suffered a major reversal when Republican leaders pulled legislation to overhaul the US healthcare system. The blow unnerved financial markets, heightening worries about the chances of enacting tax reforms and big spending packages.
The likely upper limit for gold would be at the $1,260 per ounce level over the next couple of weeks, Hynes said, adding that the precious metal would struggle to break through its 200-day average, now at $1,259.12. Gold has already rallied sharply from its March 15 low following a less-hawkish-than-expected policy statement from the US Federal Reserve, which dampened expectations for near-term increases in US interest rates.