LONDON, Jan 31 Gold reached its highest level in a week on Tuesday as unnerved investors bought bullion after the dollar was hit by U.S. President Donald Trump’s comments on currency devaluation by other countries.
Spot gold climbed 1.6 percent to $1,214.19 an ounce by 1556 GMT, its highest since Jan. 24, while U.S. gold futures gained 1.7 percent to $1,213.
The dollar index slid to the lowest in more than seven weeks after Trump said drug companies have outsourced production because of currency devaluation by other countries and his trade adviser said Germany was using a “grossly undervalued” euro to gain competitive advantage.
The U.S. currency was already weaker after Trump sacked top U.S. government lawyer Sally Yates, who refused to defend his curbs on travel from seven Muslim-majority nations. “Clearly Trump remains the main driver for gold. He has really turned from being a bit of a foe of gold to a friend with the uncertainty of his policies,” Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said.
“We’re not getting any news on fiscal spending and tax cuts. Instead, we’re hearing about protectionism and a tough stance on immigration. That’s unnerving the market.” A weaker dollar supported bullion, though traders were also eyeing a two-day Federal Reserve meeting starting later in the day, hoping for clues on the outlook for U.S. interest rates.
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