Investing.com – Gold prices were higher in early dealings on Tuesday, rebounding from its biggest one-day percentage drop in more than two-months as investors awaited fresh signals about the likely trajectory of monetary policy in the U.S. in the months ahead.
Traders were also keeping an eye on safe-haven demand for the precious metal after U.S. President Donald Trump back on a list of state sponsors of terrorism on Monday.
Comex were up about $6.00, or around 0.5%, to $1,281.00 a troy ounce by 3:15AM ET (0815GMT).
The yellow metal in its biggest one-day percentage drop since Sept. 11, as the dollar gained amid German political turmoil that left Chancellor Angela Merkel’s prospects of serving a fourth term in doubt.
Markets will be watching when she speaks in New York on Tuesday evening for any clues on interest rates. Yellen said on Monday she would resign her seat on the Fed’s Board of Governors once Jerome Powell is confirmed and sworn in to replace her as head of the U.S. central bank.
Staying on the Fed front, of its most recent policy meeting will be published on Wednesday and it could offer clues on the pace of potential interest rate hikes by the central bank.
The Fed is scheduled to hold its final policy meeting of the year on Dec. 12-13, with interest rate futures pricing in a 100% chance of a rate hike at that meeting, according to Investing.com’s . For 2018, the Fed is currently forecasting three interest rate hikes, but the markets expect two at most.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
On the political front, tax reform will likely stay at the forefront, as markets look for any new developments on the Trump Administration’s tax bill. Last week, the House voted to pass a tax bill that would lower corporate taxes and cut individual taxes for most households in 2018, in a step towards the biggest U.S. tax code overhaul since the 1980s.
But the legislation may face a tougher fight in the Senate amid resistance within Republican ranks. Senate lawmakers are expected to vote on their version of the bill after this week’s Thanksgiving holiday.
More than two Republican defections would likely kill the bill. Wisconsin Senator Ron Johnson has already publicly stated he opposes the bill in its current form.
In other metals trading, rose 12.7 cents, or 0.8%, to $16.97 a troy ounce, added 0.8% to $931.10, while inched up 0.1% at $987.25 an ounce.
Meanwhile, were largely unchanged at $3.090 a pound.
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Source: Investing.com
