LONDON (Reuters) - Gold rose on Friday as the dollar softened on uncertainty about the progress of what would be the biggest overhaul of U.S. taxes since the 1980s.
The U.S. House of Representatives approved on Thursday a package of tax cuts, while a Senate panel advanced its version of the legislation that has President Donald Trump’s backing.
“They’re pricing out Trump’s tax reform once again as a result of those two proposals in Congress that are quite far apart from each other,” said Jonathan Butler, commodities analyst at Mitsubishi in London.
The dollar weakened against a basket of six major currencies and was set for its biggest weekly loss in more than a month.
“There’s also a lot of concern that the equity market rally is possibly becoming a little exhausted for now, and that should be supportive of gold in the short term,” Butler added.
Spot gold was up 0.6 percent at $1,285.39 per ounce at 1500 GMT. It is up 0.7 percent for the week, poised to post a second straight weekly gain.
U.S. gold futures for December delivery rose 0.6 percent to $1,285.50.
Julius Baer analyst Carsten Menke said the dollar should strengthen as the U.S. Federal Reserve continues to raise rates.
“Volatility in the gold market is down towards record lows with most of the short-term swings caused by shifting expectations about the outlook for U.S. monetary policy,” he said in a note.
“While we still see gold trading lower heading into 2018, short-term headwinds should fade as the year progresses.”
The 50-day moving average in spot gold appeared to be on track to move below the 100-day average, which would be a bearish technical signal, Butler said.
In other precious metals, silver was down 0.1 percent at $17.06 an ounce, lagging gold this year with gains of 7 percent versus gold’s 10 percent.
“There hasn’t been an intrinsic silver fundamental story for some time that market participants can trade on the back of,” UBS precious metals strategist Joni Teves said in a note.
“This has meant that interest in silver has eased in recent years and that lingering participation tends to be very much driven by short-term speculative trading interest.”
Platinum rose 1 percent to $940.10 and palladium gained 0.1 percent to $988.25.
For the week, silver has risen 1 percent, in what would be its best week in five. Platinum is up 1.6 percent, heading for a third straight weekly rise, while palladium is down 0.6 percent.
Additional reporting by Vijaykumar Vedala and Arpan Varghese in Bengaluru; Editing by Mark Potter/Edmund Blair/Alexander Smith