NEW YORK/LONDON (Reuters) - Gold rose on Tuesday after hitting a six-week low in the previous session as bargain hunting set in and the dollar slid sharply after the U.S. Senate postponed a planned healthcare vote.
U.S. Federal Reserve Chair Janet Yellen said she was sticking to the plan to raise interest rates gradually and that inflation has continued to run below the Fed’s objectives.
The U.S. dollar index .DXY fell 1 percent and Wall Street dropped further, after a vote on healthcare legislation was delayed in the U.S. Senate, according to a Senate aide. [.N]
Spot gold XAU= rose 0.5 percent to $1,249.51 per ounce by 3:28 p.m. EDT (1928 GMT). It slumped to a six-week low of $1,236.46 on Monday.
U.S. gold futures GCcv1 for August settled up 0.04 percent at $1,246.90.
“Maybe gold was anticipating a much harder stance from Yellen and that’s why we’re rallying slightly rather than continuing the sell off,” said Phillip Streible, senior commodities broker for RJO Futures in Chicago.
“The dollar’s so weak, that also is lending some support on the gold market. Gold still likes that level of $1,250. That’s the pivot point right there.”
A huge sell order totalling 1.85 million ounces pushed gold to a six-week low on Monday, although the precious metal ultimately failed to break below the 200-day moving average.
“If yesterday gold wasn’t able to push below the 200-day moving average that’s a positive sign,” said ABN Amro analyst Georgette Boele.
“The market is sceptical about Fed rate rises this year and next. Overall we’re optimistic about the outlook for gold, we (see) a weaker dollar later in the year,” she added.
The dollar was already weak against the euro EUR= after the European Central Bank president said he might begin to reduce the Bank's emergency economic stimulus.
A weak dollar makes dollar-priced gold cheaper for non-U.S. investors. [USD/]
Gold prices have gained every month this year save June, due partly to geopolitical tensions which most recently included Syrian hostilities, a bailout of Italian banks, the policies of U.S. President Donald Trump and Britain’s negotiations to quit the European Union.
“The gold market is seeing a bit of a bid right now. Growing tensions in the Middle East may be playing a part,” said INTL FCStone’s Ed Meir in a note.
Among other precious metals, silver XAG= rose 0.8 percent to $16.69 an ounce, while palladium XPD= fell 0.6 percent to $860 per ounce.
Platinum XPT= rose 0.8 percent to $919.45, recovering from Monday’s six-week trough.
Additional reporting by Nithin Prasad and Vijaykumar Vedala in Bengaluru; Editing by Marguerita Choy and David Evans