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Gold steadies ahead of Trump policy speech

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PRECIOUS-Gold steadies ahead of Trump policy speech


* Trump to speak on tax cuts and spending
* Gold and silver hit 3-1/2 month highs in previous session

(Updates throughout, adds LONDON dateline)
By Zandi Shabalala

LONDON, Feb 28 Gold held steady on Tuesday after
falling from a 3-1/2 month high in the previous session as the
market waited on a speech by U.S. President Donald Trump that is
expected to provide more clarity on economic reforms.
Spot gold was down 0.1 percent at $1,251.46 an ounce
by 1058 GMT, having hit its highest since Nov. 11 at $1,263.80
on Monday.
U.S. gold futures fell 0.5 percent to $1,252.70.
Investors are shifting their attention to Trump's policy
speech to a joint session of Congress on Tuesday night, when he
is expected to provide clues on his tax-cutting
plans.
"There is lots of uncertainty ahead of Trump's speech," said
Commerzbank commodity analyst Carsten Fritsch, adding that
expectations for tax cuts had been raised.
The President had said on Monday that he would propose a
budget that would ramp up spending on defence while seeking
savings elsewhere.
"After yesterday's news about an increase in military
spending it will even be more complicated to keep the budget in
check," Fritsch said.
"A massively increased budget deficit would undermine
confidence in the dollar and benefit gold."
The dollar index was also little changed at 101.08
ahead of Trump's speech.
"A possible setback could set in (for gold) over the next 24
hours, but we could still end the week on a firmer note," INTL
FCStone analyst Edward Meir said in a note.
Meir said that any price movement is likely to be
short-lived because "many of the proposals need to translated
into actual legislation and also need congressional approval".
But some upside could be on the cards for gold this week if
U.S. Federal Reserve chair Janet Yellen suggests in her
testimony on Friday that the central bank is likely to hold off
from an interest rate move in March.
A delay in a Fed rate hike would be positive for
non-interest bearing bullion while also pressuring the dollar,
making dollar-denominated gold more appealing to buyers with
other currencies.
However, there are still some Fed officials pushing for a
rate increases as soon as next month.
Spot silver was flat at $18.26 an ounce, having
touched a 3-1/2-week high at $18.48 in the previous session.
Platinum was 0.1 percent weaker at $1,028.50 after
scaling a five-month high on Monday at $1,044.10.
Palladium bucked the downward trend in precious
metals, firming 0.2 percent to $782.10.

(Reporting by Nallur Sethuraman in Bengaluru; Editing by David
Goodman)


http://www.reuters.com/article/global-precious-idUSL3N1GD3NG