LONDON - Gold prices rose for a fourth day on Wednesday as expectations that the U.S. government will enact the country's biggest tax reforms in 30 years held the dollar steady.
Gold has risen more than 2 percent from a five-month low of $1,235.92 on Dec. 12, helped by a weakening dollar that makes gold cheaper for holders of other currencies. [FRX/]
However, market players are expected to be wary of taking new positions before the holiday season and prices are on track to register their narrowest trading range of any quarter in a decade in the last three months of 2017.
"Gold is coming up from a cyclical bottom. It's going to get quieter due to the upcoming holiday long-weekends," said Mun Chun Loh, director, Private Wealth at GoldSilver Central Pte Ltd in Singapore.
Spot gold was up 0.2 percent at $1,264.52 an ounce at 1009 GMT while U.S. gold futures were 0.3 percent higher at $1,267.70 an ounce.
The dollar has slipped from a one-month high earlier this month but was steady on Wednesday after the Republican-led U.S. Senate approved a sweeping $1.5-trillion tax bill that could boost U.S. economic growth.
Markets were however looking ahead to Friday by which time Congress must pass a temporary spending bill to avoid a government shutdown, said INTL FCStone analyst Edward Meir.
Holdings of the world's largest gold-backed exchange-traded fund, New York-based SPDR Gold Shares, fell 1 percent over Monday and Tuesday to the lowest level since early September.
But low prices have spurred demand for physical gold in China, with local premiums approaching $11, said MKS PAMP trader Sam Laughlin.
Goldman Sachs said in a note it expected gold prices to fall further and reach $1,200 an ounce by mid-2018.
"We see the decline in gold as evidence that "fear" effects, which had been keeping gold supported, have at least partially moderated as U.S. tax reform and the transition to a new Fed chair appear to be going smoothly," it said.
On the technical side, resistance was at the 200-day moving average at $1,269.15 an ounce and momentum indicators suggested gold would continue to rise if it remained above a fibonacci level of $1,260.50, said analysts at ScotiaMocatta in a note.
Amongst other precious metal prices, silver was unchanged at $16.12 an ounce.
Platinum was up 0.3 percent at $916.30 an ounce and palladium was also 0.3 percent higher, at $1,025.22.