This has led investors to question whether Trump can push through tax cuts and deregulation and fueled demand for safe-haven assets including gold.
The dollar fell to its lowest since Trump was elected in November and is likely to drop further, Boele said. Stocks fell and ten-year U.S. bond yields were at the lowest level since April 21.
An unexpected fall in U.S. homebuilding, meanwhile, added to a run of weak economic data, raising new doubts about how many times the Federal Reserve will raise interest rates this year.
Futures traders are pricing in a 71 percent chance of a June rate rise, down from around 90 percent earlier this month, according to CME's FedWatch Tool.
On the technical side, gold broke above resistance at its 200-day moving average and Fibonacci retracement, both at around $1,245, triggering technical buying.
If gold can hold above that level it could rise to its long-term downtrend line at $1,287 an ounce, said technical analysts at Commerzbank.