December 19, 2017 / 4:27 AM / 3 months ago

PRECIOUS-Gold ticks higher; investors eye passage of U.S. tax bill

    * SPDR gold holdings down 0.8 pct on Monday
    * Dollar index edges lower

 (Adds FXTM analyst comment, updates prices)
    By Apeksha Nair
    Dec 19 (Reuters) - Gold prices edged higher on Tuesday as
the dollar weakened, with investors considering the potential
impact of a sweeping tax legislation in the United States that
Congress appeared all but certain to pass this week. 
    Spot gold        was up 0.2 percent at $1,263.61 an ounce as
of 0808 GMT. U.S. gold futures         rose 0.1 percent to
$1,267 an ounce. 
    Two Senate Republican holdouts agreed on Monday to support
the tax overhaul backed by President Donald Trump, with the
House of Representatives set to vote on Tuesday and the Senate
either later on Tuesday or on Wednesday.              
    "Passing the tax reforms and getting the bill signed this
week should reasonably drag gold prices lower as it means more
appetite to risk assets, higher interest rates, and higher
dollar," said Hussein Sayed, Chief Market Strategist at FXTM.
    However, the flattening in the yield curve could likely cap
any dollar gains, Sayed said.      
    Optimism surrounding the bill has helped equities surge to
record highs, but the dollar remained mired in its recent ranges
in subdued trade, as investors mulled over its ultimate effect
on economic growth.                    
    "We are somewhat wary about gold's upside potential here and
would not be buying it at current levels as we think there are
more reasons working against it at this stage than for it," INTL
FCStone analyst Edward Meir said.
    "Higher equities, surging bitcoin prices, and the
possibility that the tax bill could trigger a modest short-term
uptick in both the dollar and U.S yields" could weigh on gold,
Meir added.
    Even as the Congress moved closer to the tax reform,
outgoing Federal Reserve Chair Janet Yellen last week gave a
more sobering assessment of its impact, saying a short-term bump
is likely, but a longer-term boost is not.              
    "We expect prices to work higher through the headwind of
firmer U.S. monetary policy and expect there will be further
bouts of safe-haven buying on the back of the North Korea
situation. We expect spot gold prices to trade in a $1,190 to
$1,390 per ounce range in 2018," Scotiabank analysts said in a
    Holdings in SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, fell 0.8 percent to 837.20
tonnes on Monday.          
    In other precious metals, silver        edged down 0.3
percent to $16.09 an ounce.
    Platinum        was up 0.4 percent at $910 an ounce, having
climbed back above $900 for the first time in nearly two weeks
in the previous session.
    Palladium        was unchanged at $1,017.70 an ounce.

 (Reporting by Apeksha Nair in Bengaluru; Editing by Biju
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