By Anushree Mukherjee
(Reuters) – Gold prices rose nearly 1% on Wednesday, hitting their highest levels in more than a week, as a weaker dollar and U.S. fiscal uncertainty amid Congressional debate on a sweeping tax bill spurred demand for safe-haven assets.
Spot gold was up 0.9% at $3,319.51 an ounce, as of 0643 GMT. Earlier in the session, bullion touched its highest level since May 12.
U.S. gold futures gained 1.1% to $3,320.30.
The dollar retreated to its lowest level since May 7, making greenback-priced gold cheaper for holders of overseas currency. [USD/]
“The general dollar index lost more than a full point in the last 24 hours as the Moody’s downgrade, plus skepticism about trumps tax bill continues to undermine the dollar,” which is positive for gold, said Marex analyst Edward Meir.
Trump’s tax cut and spending bill will face a critical stress test later in the day, as Republicans in the U.S. House of Representatives try to overcome internal divisions about cuts to the Medicaid health program and tax breaks in high-cost coastal states.
Gold, traditionally considered a safe-haven asset during political and economic uncertainty, tends to thrive in a low-rate environment.
“Over the medium- to longer-term, further upside in gold is favoured, though if any positive trade-deal headlines arise this could be an obstacle for gold in attempting to reclaim the $3,500 level,” said KCM Trade Chief Market Analyst Tim Waterer.
St. Louis Fed President Alberto Musalem told the Economic Club of Minnesota that easing trade tensions would allow the labor market to stay strong and inflation to remain on path to the Fed’s 2% goal.
Spot Palladium fell 0.8% to $1,005.11, but hit its highest level since February 4, earlier in the session.
“Palladium has been starved for good news… Honda moving more towards hybrids and not EV is a decent reason” said Tai Wong, an independent metals trader.
Both platinum and palladium are used by automakers in catalytic converters to reduce exhaust emissions.
Silver rose 0.2% to $33.14 an ounce, while platinum was down 1% at $1,043.35.
(Reporting by Anushree Mukherjee in Bengaluru; Editing by Sonia Cheema and Sherry Jacob-Phillips)
