Gold prices pull back from 3-month highs after Trump's tax remarks

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Gold prices fell Thursday, edging away from three-month highs, after U.S. President Donald Trump said he would give an announcement regarding taxes in the next few weeks.

Spot gold was down 0.6 percent at $1,234.11 an ounce, having struck its highest since Nov. 11 at $1,244.67 in the previous session. U.S. gold futures erased earlier gains, settling $2.70 lower at $1,236.80.

"Lowering the overall tax burden on American business is big league ... that's coming along very well. We're way ahead of schedule, I believe. And we're going to announce something I would say over the next two or three weeks that will be phenomenal in terms of tax," Trump said at a meeting with airline executives.

Gold has risen more than 1 percent this week as Trump has fought to enforce his temporary travel ban on people from seven Muslim-majority countries and as far-right leader Marine Le Pen launched her bid for the French presidency.

Also pressuring gold prices were U.S. data, which pointed to a stronger economy, increasing the likelihood that the Federal Reserve will raise U.S. interest rates. The data showing rising U.S. wholesale inventories and an unexpectedly low number of Americans filing for unemployment benefits also pushed up the dollar and U.S. bond yields.

A stronger dollar makes gold more expensive for holders of other currencies, while higher yields increase the opportunity cost of holding non-yielding bullion. Higher interest rates would lift yields further.

"If people were betting on the Fed being more relaxed and rates being lower for longer, this (data) has muddied that picture," said Robin Bhar at Societe Generale. With gold striking $1,244.67, its highest since Nov. 11, on Wednesday, some investors had turned cautious and were cashing in their bets on higher prices, Bhar said.

Federal Reserve Chair Janet Yellen is due to appear before U.S. senators and members of Congress on Jan. 14 and Jan. 15, when she will be quizzed about the U.S. economy.

Gold has risen by about 10 percent from a mid-December low as political risk in Europe and the United States has driven demand for bullion as a safe haven. Those worries were fueled on

Those worries were fueled on Thursday by official data that showed Germany's trade surplus climbed to a record high in 2016, setting the scene for conflict between Berlin and Washington after Trump's top trade adviser last week accused Berlin of exploiting a "grossly undervalued" euro to gain trading advantage.

Adding support to prices, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased its bullion holdings for a sixth day on Wednesday.

"We see gold as relatively underpriced, given the rally in commodities and high level of political uncertainty," said Hamza Khan at ING. Khan said that gold could rise as high as $1,350 an ounce before too long, having seen jumps of $10 a day.