BENGALURU (March 27): Gold rose more than 1% to touch a one-month peak on Monday, as the dollar plunged and equities fell after U.S. President Donald Trump suffered a setback on healthcare reform, raising doubts about his ability to steer the economic agenda.
Spot gold rose 1.1% to US$1,258 per ounce by 0704 GMT after hitting US$1,259.14, its highest since Feb 27.
U.S. gold futures were up 0.8% at US$1,258.
Trump's inability to deliver on a major election campaign promise marked a big defeat for a Republican president whose own party controls Congress, and raised doubts whether he would be able to push through tax reforms and mega-spending packages.
"Looks like some people are not happy with Trump's failure over his promises and we see that currently there is a very bearish mood about the U.S. dollar," said Jiang Shu, chief analyst at Shandong Gold Group.
The dollar slid to a 4-1/2-month low against a basket of currencies on Monday, dropping to its worst since Nov 11, 2016.
U.S. stock index futures fell 0.7% to a six-week low in heavy volume, suggesting a weaker start on Wall Street later in the day.
"With Trump's 100 days of action rapidly becoming 100 days of inaction, and ahead of French elections, gold should remain bid on any meaningful dips going forward," said Jeffrey Halley, senior market analyst at OANDA.
Gold could however struggle in the short-term, as major resistance in the shape of the 200-day moving average at 1,260.50 looms and the market is looking overbought, Halley added.
Bullion has rallied nearly US$60 since its March 15 low, following a less-hawkish policy statement from the U.S. Federal Reserve.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding assets that do not earn interest and also strengthen the dollar. Gains in the dollar typically weaken any commodity denominated in the currency.
Hedge funds and money managers boosted their net long positions in COMEX gold after two weeks of cuts, and reduced them slightly in silver in the week to March 21, U.S. Commodity Futures Trading Commission data showed on Friday.
Spot silver rose 0.7% to US$17.87 an ounce after hitting a near 3-week high of US$17.916, while platinum rose 1.3% to US$973.50.
Palladium fell 0.2% to US$807.15, after it touched a more than 2-year peak of US$815.40 in the previous sessions.