COMEX gold trades in a narrow range near $1260/oz holding on to recent gains. Choppiness in US dollar and equity market has lent support to gold price.
The US dollar index has weakened amid uncertainty about Fed's monetary policy and narrowing yield gap between US and European bond. German bond yields rose sharply yesterday on reports that the nation plans to borrow more money on capital markets in 2018.
US DJIA index fell 0.2% yesterday after testing record high levels earlier this week. Market players are trying to assess economic impact of tax reforms. The US House of Representatives voted to approve tax bill Tuesday, but will have to vote again Wednesday due to procedural issues. The bill will then be put to vote in the Senate. US tax reforms are expected to cut taxes for both individuals and corporates, which may result in higher spending and investment and thereby higher growth. However, it will add to debt burden over the years.
Gold may continue to trade sideways unless we get more clarity on US tax reforms however US economic optimism will continue to weigh hence bias may be on the downside