Gold resumes downward slide as Trump tax plan boost fades
By Marcy Nicholson and Peter Hobson
NEW YORK/LONDON (Reuters) - Gold resumed its downward slide from a five-month high in mid-April, giving up gains that came after U.S. President Donald Trump announced unfunded tax cuts, while comments from European Central Bank President Mario Draghi weakened the euro.
Spot gold (XAU=) was down 0.3 percent at $1,265.21 an ounce by 3:09 p.m. EDT (1909 GMT), while U.S. gold futures (GCcv1) settled up 0.1 percent at $1,265.90.
Gold has fallen 1.5 percent this week as it slipped from a April 17 high of $1,295.42.
On Wednesday, gold prices bounced up from a two-week low after Trump proposed slashing the U.S. tax rate on corporate profits.
"The lack of follow-through from last night's markets had to do with the ECB and strength in the dollar putting a hold on gold," said Bob Haberkorn, senior market strategist for RJO Futures in Chicago.
The dollar (.DXY) rose after U.S. business investment accelerated in the first quarter and the euro hit session lows after Draghi said policymakers did not discuss removing the bank's easing bias on monetary policy at Thursday's meeting.
Ole Hansen, head of commodities strategy at Saxo Bank, said the gold market was going through a correction phase, with several broad factors that had driven prices higher fading.
"We've seen a strong rally in stocks and U.S. bond yields move up again, and we have almost had a day without North Korea being mentioned," he said.
Investors traditionally use gold as a hedge against political uncertainty, while rising stock prices and higher yields increase the opportunity cost of holding non-yielding bullion.
Analysts at Mitsubishi and MKS PAMP said that technical support would come in at about $1,257, the first Fibonacci retracement from a recent rally, and the 200-day moving average, currently $1,252.50.
Bullion has been supported by physical demand. Data on Thursday showed Swiss gold exports to Hong Kong, China and India rose in March, while Chinese gold production fell in the first quarter.
But consumption in China and India traditionally declines in the second quarter, said Mitsubishi analyst Jonathan Butler, potentially pushing prices lower.
Faster economic growth or more detail on Trump's tax plans could also prompt investors to move money from bullion to higher-yielding assets, Butler said.
In other precious metals, silver (XAG=) was down 0.8 percent at $17.32 an ounce, after falling to $17.21, the lowest since March 17.
Spot palladium (XPD=) was up 0.9 percent at $815.50, after rising to $817.50, the highest since March 2015, while platinum (XPT=) was down 0.7 percent at $940.
(Additional reporting by Swati Verma in Bengaluru; Editing by Meredith Mazzilli)
