Gold Gains In Asia As Investors Eye US Tax Cut Progress, Dollar

© Reuters. Gold edged up in Asia

Investing.com - Gold edged higher in Asia as the dollar eased slightly on concerns about the final leg of passage for US tax cuts -- agreement on the House and Senate versions.

Gold futures for February delivery on the Comex division of the New York Mercantile Exchange rose 0.02% to $1,278.90 a troy ounce.

Australia reported the RBA rate review for December held a steady cash rate of 1.50% as expected. In China, the Caixin services PMI came in at 51.9, better than the reading of 51.5 expected for November.

Earlier in Australia, the current account data for the third quarter came in at a deficit of A$9.11 billion, compared with a deficit of A$9.2 billion seen. As well, retail sales rose 0.5%,for October, better that the 0.3% on month gain seen. Australia also reported the AIG services index for November at 51.7 with a previous month reading of 51.4.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased 0.02% to 93.03.

Overnight, gold prices came under pressure on Monday amid a stronger dollar after the U.S. Senate approved a tax bill aimed at overhauling the U.S. tax system and boosting economic growth.

US senators passed a tax by narrow by a 51-49 vote, stoking investor hopes of a fiscal boost to the U.S. economy, spurring a rally in the dollar, which pressured demand for gold. The Senate and the House of Representatives is expected to get talks underway this week to reconcile their respective bills.

Rising investor hopes on tax reform comes as the Federal Reserve entered its blackout period ahead of the Dec. 12-13 meeting amid expectations that the central bank will raise rates for the third time this year.

According to investing.com’s fed rate monitor tool 100% of traders expect the Federal Reserve to raise rates in December.

Gold is sensitive to moves higher in both bond yields and the U.S. dollar – A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates, lift the opportunity cost of holding non-yielding assets such as bullion.