Reuters logo
PRECIOUS-Gold rebounds above 2-week low as Trump proposes tax cuts
April 26, 2017 / 10:20 AM / in 7 months

PRECIOUS-Gold rebounds above 2-week low as Trump proposes tax cuts

    * Trump proposes slashing business tax rates
    * Spot gold may fall to $1,200/oz - Julius Baer
    * Silver falls to five-week low

 (Recasts, updates prices; adds comment, second byline, NEW YORK
    By Marcy Nicholson and Eric Onstad
    NEW YORK/LONDON, April 26 (Reuters) - Gold recovered from a
two-week low, buoyed by short-covering on Wednesday as U.S.
Treasury yields turned lower and the dollar pared gains after
President Donald Trump proposed slashing the U.S. tax rate on
corporate profits.
    Trump proposed cutting the corporate and pass-through
business profits tax rate to 15 percent from 35 percent or more,
as well as offering tax cuts to average Americans in a rough
outline of his tax policy goals.             
    Spot gold        was up 0.3 percent at $1,266.81 an ounce by
3:10 p.m. EDT (1910 GMT). Earlier in the session prices hit
1,259.90, their weakest since April 11. 
    U.S. gold futures         settled down 0.2 percent at
    "Gold rallied to session highs on short-covering after the
key $1,260 level held multiple times today amid lingering
concerns that tax reform could balloon deficits," said Tai Wong,
director of base and precious metals trading for BMO Capital
Markets in New York.
    "However, tax reform's impact on asset prices and gold could
be transitory since the final version of any bill is likely to
look starkly different and unlikely to be introduced for
    The late-day move higher came after bullion spent much of
the session little changed.
    "The reason we're pausing here is people are trying to
figure out what's going to happen with the U.S. economy and
rates," said Brad Sanderson, analyst at Cohen & Steers in New
    Gold prices are down more than 2 percent from last week's
five-month high as risk appetite increased on easing
geopolitical concerns. 
    "You had a decent set of risk factors that supported gold
over the past few weeks and I'd argue that most of them are
priced out of the market again," said Carsten Menke, analyst at
Julius Baer in Zurich.               
    "That's why we believe that prices should reach $1,200 over
the next three months."
    Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, fell 0.7 percent on Tuesday.
    Spot silver        dropped 0.6 percent to $17.44 an ounce,
after tapping $17.28, the lowest since March 21.
    Platinum        fell 0.2 percent to $948.60, while palladium
       rose 1.2 percent to $809.70.
    "Palladium bucked the trend and prices were quite strong
this week. We believe, however, this is too high, given that
we're having a slowdown in global car sales from China and also
the U.S.," said Menke.
    "The palladium market is too bullish and we're still looking
for a correction of at least 10 percent, moving towards $700." 

 (Additional reporting by Swati Verma and Nallur Sethuraman in
Bengaluru, Editing by Jon Boyle and Chizu Nomiyama)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below