Gold Heads for Month Low as US Senate Passes Trump’s Tax Cuts

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US dollar/yen rises to 2-1/2-week high after US Senate approves tax cuts

The fate of a federal electric vehicle (EV) tax credit remains uncertain after the U.S. Senate approved sweeping tax reform legislation early Saturday morning. This mitigated risk concerns after markets were spooked by news that former National Security Adviser Michael Flynn was cooperating with an investigation into possible Russian interference in U.S elections.

The US dollar index against a basket of six major currencies was 0.2 per cent higher at 93.051.

“I think people will be disappointed that gold had that race up to $1290 area on Friday and we’re sitting at $1275.any kind of rally gold has just seems to be unsustainable for the short-term” said a Hong Kong-based gold trader.

On the technical front, strong support for gold is around $1,266 at the 200-day moving average, while resistance kicks in around $1,283 near the 21-and 55-day moving averages.

“Whatever is happening to the dollar and the yield curve, you’ve got to be watching that”, the trader said.

Two Federal Reserve policymakers had urged caution in raising interest rates on Friday, saying that the flattening of the yield curve was a signal that the central bank should proceed slowly.

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 United States central bank meets on December 12 and 13.

In late trading, European and other players placed dollar purchases, lifting the currency to two-week highs above ¥113 temporarily, according to the sources. An increase in rates also reduces the incentive for investors to hold onto the non-interest-bearing metal.

Meanwhile silver slipped 0.9% to $16.29 an ounce, platinum was 0.7% lower at $930.5 an ounce and palladium lost 0.6% to $1,014.4.

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