Gold gained as the dollar and U.S. stocks fell report that former national security adviser Michael Flynn was prepared to tell investigators that Donald Trump directed him to make contact with Russians during last year’s presidential election campaign. Investors feared the political news could affect whether the Senate will pass a tax bill backed by Trump.
The report about Flynn “was a good catalyst for people who were anticipating buying gold. It sparked the fear trade.” The recent weakness in gold could be attributed to an ongoing rally in global equity markets, boosted by “economic optimism and hopes regarding tax reform”. Separately, federal prosecutors said Flynn pleaded guilty to lying to the Federal Bureau of Investigation and also admitted to speaking with a top member of the Trump transition team regarding his communications with Russia’s ambassador to the United States.
Physical gold demand was steady in most Asian centers as buyers hoped for further price dips amid growing appetite for riskier investments, while a slide in local rates failed to restore bullion’s allure in India. In China, gold was sold at a premium of $5-$8 an ounce over benchmark rates, mostly unchanged from last week.
In India, the world’s second biggest gold consumer after China, a correction in local prices to the lowest level in over three months failed to spur fresh demand as jewellers postponed purchases, expecting a bigger dip. Technically now Gold is getting support at 1270.91 and below same could see a test of 1261.91 level, And resistance is now likely to be seen at 1289.1, a move above could see prices testing 1298.29.