LONDON (Reuters) - Gold prices fell on Monday towards the four-week lows hit last week as the dollar strengthened after U.S. politicians approved a major tax overhaul and the market looked ahead to a meeting of the Federal Reserve later this month.
Spot gold was down 0.3 percent at $1,276.00 an ounce by 1237 GMT, not far from last Thursday’s $1,270.11, its lowest level since Nov. 6.
U.S. gold futures fell 0.3 percent to $1,278.80.
The U.S. Senate approved a tax reform bill on Saturday, moving U.S. President Donald Trump a big step closer to his goal of cutting taxes for businesses and the rich while offering everyday Americans a mixed bag of changes.
“Prospects for large U.S. tax cuts are a negative for gold ... What the Fed does will be very important,” said Quantitative Commodity Research consultant Peter Fertig.
“There is a negative influence coming from other commodities like oil, the dollar is stronger and risky assets are up.”
Lower oil prices could mean subdued price pressure, which is a negative for gold, often used as a hedge against inflation.
The dollar was boosted by expectations that tax cuts would boost growth, which could fuel inflation and reinforce the case for higher U.S. interest rates when the U.S. central bank meets on Dec. 12 and Dec. 13.
However, on Friday two Federal Reserve policymakers urged caution in raising interest rates.
“The tax bill should be somewhat bearish for gold as it could place the Fed in a more aggressive rate posture, given that it could contribute to a widening deficit and potentially raise inflation,” INTL FCStone analyst Edward Meir said in a note.
But he said the tax bill was not expected to have much impact on gold in the short term.
On the technical front, strong support for gold is around $1,266 at the 200-day moving average, while resistance kicks in at about $1,283 near the 21-day and 55-day moving averages.
In other previous metals, silver slipped 0.7 percent to $16.32 an ounce, platinum was down 1 percent at $927.5 and palladium lost 0.7 percent to $1,013.00.
Additional reporting by Apeksha Nair in Bengaluru; Editing by Greg Mahlich and David Goodman