Gold hits 3-wk peak as investors shun equities on Trump worries

Gold hits 3-wk peak as investors shun equities on Trump worries
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BENGALURU (March 22): Gold prices rose to a three-week high on Wednesday, as risk-averse investors dumped equities amid a weaker dollar and sought safe havens on growing doubts about U.S. President Donald Trump's economic agenda.

Spot gold had risen 0.3% to US$1,247.56 per ounce by 0644 GMT, after touching a three-week peak of US$1,248.47.

U.S. gold futures were firm at US$1,246.30.

The dollar index, which measures the greenback against a basket of currencies, was at 99.761, near the six-week low of 99.642 reached on Tuesday.

Asian stocks fell on Wednesday as growing doubts about President Trump's economic growth agenda prompted investors to dump risky assets.           

"It seems that equity investors decided to take some money off the table, perhaps getting slightly wary about the progress in President Trump’s legislative agenda," INTL FCStone analyst Edward Meir said.

"Gold will likely continue to rally going into Wednesday’s session as Tuesday’s U.S. stock market selloff was significant and will likely have a knock-on effect on international equity markets over the next 24 hours."

Gold has rallied nearly US$50 from last Wednesday's low, following a less hawkish policy statement from the U.S. Federal Reserve.

"The re-positioning of investors since the FOMC meeting continues unabated, with investors becoming less bearish as a result of the subdued outlook for rates in 2018," ANZ analysts said in a note.

The lack of a concrete policy from the Trump administration is worrying investors and more people will opt for gold, as a safe-haven investment when the stock markets go lower, analysts and traders said. 

"With the fate of the health care bill uncertain, more important legislation that equity investors want to see passed, namely, tax reform and infrastructure spending are both bottled up and languishing," Meir said.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.50% to 834.40 tonnes on Tuesday from 830.25 tonnes on Monday. 

Holdings rose 4.15 tonnes on Tuesday, after three straight sessions of outflows, underpinning investors' interest in the metal.

"Gold looks well positioned for a test above resistance at US$1,248-US$1,250," MKS PAMP Group trader Sam Laughlin said.

Spot silver was up 0.2% to US$17.52 per ounce, after hitting a more than two-week high of US$17.59 in the previous session.

Platinum was 0.3% higher at US$969.50 per ounce, after touching a two-week peak at US$974.80 on Tuesday.

Palladium was down 0.7% at US$780.18 per ounce.

The metal hit a more than one-month high at US$792.90 in the prior session.