NEW YORK/LONDON – Gold rallied more than 1 percent on Monday after U.S. President Donald Trump’s failure to push through a healthcare reform package on Friday raised questions over his ability to deliver promised tax cuts and spending plans.
That knocked the dollar .DXY to a four-month low versus a basket of currencies. Stocks and U.S. long-dated Treasury yields slipped but recovered lost ground as investors hoped Trump will still be able to bolster the economy. [MKTS/GLOB]
Spot gold XAU= was up 1 percent at $1,256.02 an ounce by 2:28 p.m. EDT (1828 GMT), having touched a one-month high of $1,261.03 and failing to hold above the 200-day moving average for the second time in a month. U.S. gold futures GCv1 for April delivery settled up 0.6 percent at $1,255.70.
“This is entirely driven by the weaker U.S. dollar,” Commerzbank analyst Carsten Fritsch said. “The Trumpflation trade is being priced out after the failure to repeal Obamacare.”
Gold had already rallied sharply from its March 15 low after a less hawkish policy statement than expected from the Federal Reserve, which dampened expectations for near-term increases in U.S. interest rates.
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