Gold prices held steady on Wednesday, not far from the over two-week highs hit in the previous session, as the dollar crept up from multi-month lows even as fading prospects of a U.S. monetary tightening continued to pressure the greenback.
The dollar stayed on the defensive and remained near over 10-month lows as investors wagered any further tightening in the United States would be slow at best, while optimism on China`s economy underpinned Asian shares and commodities.
"We still remain somewhat neutral on gold this year despite a rather good run of late," said Edward Meir, analyst at INTL FCStone. "Still, we are not overly bearish on the precious metal at the stage either, as the backdrop of a falling dollar is too difficult to ignore."
Also weighing on the dollar was the collapse of Republican efforts to overhaul or repeal Obamacare in the U.S. Senate on Tuesday, dealing a sharp setback to Trump and the Republican Party`s seven-year quest to kill former President Barack Obama`s signature healthcare law.
"The recent strength (in gold prices) is due to currency dynamics more than anything else," said Mark Keenan, commodity strategist at Societe Generale.
"We continue to forecast lower prices moving forward," Keenan said.
Spot gold was nearly flat at $1,241.46 per ounce at 0408 GMT. In the previous session, it hit its highest since June 30 at $1,244.56. U.S. gold futures for August delivery fell 0.1 percent to $1,240.90 per ounce.
Spot gold may rise more to $1,250 per ounce, as it has cleared a resistance at $1,239, according to Reuters technical analyst Wang Tao.
"We think the market may have done too much, too quickly for the time being and may be in store for a breather," Meir said.
Meanwhile, holdings at the SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, fell 0.68 percent to 821.45 tonnes on Tuesday from 827.07 tonnes on Monday.
In other precious metals, silver rose 0.1 percent to $16.26 per ounce, after touching its highest in about two weeks in the previous session.
Platinum fell 0.2 percent, to $920.50 per ounce. On Monday, it had touched its highest since mid June.
Palladium fell 0.3 percent to $861.25 per ounce.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)