Gold prices hit a four-week high in early U.S. trading Monday, after U.S. President Donald Trump’s failure to push through a healthcare reform package on Friday.
Gold had already risen sharply from its March 15 low after a policy statement from the Federal Reserve, which decreased expectations for near-term increases in U.S. interest rates.
Spot gold was up 1.2 percent at $1,259.11 an ounce at 1350 GMT, having reached a one-month high of $1,261.03.
Dollar hits lowest since November
A key U.S. dollar index on Monday fell to its lowest level since November as investors lost confidence in prospects for a U.S. fiscal spending boost under President Trump.
“Investors are worried about the challenges Trump will face in trying to get his other policies passed which may well limit the government’s fiscal spending. The worry is that not only will this weigh on GDP, but potentially on inflation too. Thus, the Fed may not raise interest rates as aggressively as had been priced in, hence the fall in the dollar,” said Fawad Razaqzada, technical analyst at FOREX.com.
The dollar was down 0.65 percent on the day against the basket of major currencies used to measure its broader strength. Against the yen, the dollar fell more than one percent to 110.09, its lowest level since November 18. On the other hand, the euro reached $1.0904, its highest level since November 11.
Pound hits one-month high
The US healthcare bill failed to pass through the US Congress on Friday, in a sign that the new US President’s ability to pass market-friendly legislation in the future is not as assured as markets expected.
The pound broke above $1.26 for the first time in nearly two months, as a consequence of these political proceedings in the US.
Sterling strengthened against most of its peers, but further upside may be limited due to political uncertainties surrounding UK’s exit from the European Union.