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PRECIOUS-Gold slips on higher dollar after U.S. tax proposal advances
December 4, 2017 / 2:59 PM / 7 days ago

PRECIOUS-Gold slips on higher dollar after U.S. tax proposal advances

    * Market looking ahead to Fed meeting
    * Gold support at $1,266, around 200-day moving average

 (Recasts with U.S. trading, updates prices, adds analyst's
comment, adds NEW YORK to dateline)
    By Renita D. Young and Pratima Desai
    NEW YORK/LONDON, Dec 4 (Reuters) - Gold prices fell on
Monday toward the four-week lows hit last week as the U.S.
dollar strengthened after the U.S. Senate approved a major tax
overhaul and the market looked ahead to a meeting of the Federal
Reserve later this month.
    Spot gold        was down 0.5 percent at $1,274.16 an ounce
by 1:50 p.m. EST (1850 GMT,) not far from last Thursday's
$1,270.11, its lowest level since Nov. 6. 
    U.S. gold futures for February delivery         settled down
$4.60, or 0.4 percent, at $1,277.70 per ounce. 
    The dollar was lifted by expectations that U.S. tax cuts
would boost economic growth, which could fuel inflation and
reinforce the case for higher U.S. interest rates when the U.S.
central bank meets on Dec. 12-13.       
    The U.S. Senate approved a tax reform bill on Saturday,
moving President Donald Trump a big step closer to his goal of
cutting taxes for businesses and the rich while offering
everyday Americans a mixed bag of changes.             
    "The tax proposal would be bad for gold because it is
expected to increase growth in the U.S., making the Fed more
likely to increase interest rates. Higher rates are bad for a
non-yielding asset like gold," said Ryan McKay, commodity
strategist at TD Securities in Toronto.
    The U.S. Senate's and House of Representatives' separate
forms of the tax bill still must be reconciled. Uncertainty over
whether this can be done in a timely manner and tensions over
North Korean missile tests gave gold underlying support, McKay
said.                          
    Concerns over an investigation into former U.S. national
security adviser Michael Flynn's contact with Russia's U.S.
ambassador during Trump's election campaign also gave gold
underlying support, he added.             
    "There is a negative influence coming from other commodities
like oil, the dollar is stronger and risky assets are up," said
Quantitative Commodity Research consultant Peter Fertig.
    Lower oil prices could mean subdued price pressure, which is
a negative for gold, often used as a hedge against inflation.
     
    Gold has been stuck in a $1,270-$1,300 range this year,
traders said.
    Strong technical support for gold is around $1,266 at the
200-day moving average, while resistance kicks in at about
$1,283 near the 21- and 55-day moving averages.
    In other precious metals, silver        slipped 0.8 percent
to $16.31 an ounce, after dipping to $16.22, the last session's
low. Platinum        was down 1.33 percent at $925, touching a
nearly two-week low of $918. Palladium        dropped 2.3
percent to $996.50 an ounce, hitting $993.97, a one-week low.

 (Additional reporting by Apeksha Nair in Bengaluru; Editing by
David Goodman and Matthew Lewis)
  

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