Gold rose on Wednesday, hovering near a three-week high as the dollar retreated on expectations of possible delays in long-awaited U.S. tax reforms, while palladium hit its highest since 2001.
U.S. House of Representatives Speaker Paul Ryan left the door open to a possible delay in implementing lower tax rates for corporations, following a media report that his fellow Senate Republicans were exploring the option.
U.S. equities fell and the dollar index, which measures the greenback against a basket of six currencies, dipped 0.1 percent toward 3-1/2 month lows touched in recent weeks.
"The closer we get to the interest rate hike in December the lower the price of gold should get," said Natixis precious metals analyst Bernard Dahdah.
A December interest rate hike has been priced into the market, traders said. But a potential delay in the tax plan could mean a moderation in interest rate increases next year, which could support gold, they noted.
"If (Republicans) can't get something done, you could see more of a bid come back into gold," said Josh Graves, senior market strategist at RJO Futures in Chicago.
Rising U.S. interest rates tend to boost the dollar and lift the opportunity cost of holding non-yielding assets such as gold.
In physical demand, industry officials and analysts warned that India's gold imports in the last quarter of 2017 could drop 25 percent from a year ago due to weak demand during key festivals and as investors seek better returns from riskier assets like equities.
In other precious metals, palladium was up 2.19 percent at $1,014.50 an ounce, after hitting its highest since 2001 at $1,019.
Palladium's premium over platinum hit $85 per ounce, also its highest since May 2001. In September, palladium became more valuable than platinum for the first time in 16 years.
The metal, mostly used for auto catalysts to clean pollution from exhaust fumes, has rallied on an expected supply deficit and higher demand in the automobile market. Much of the demand came from China and parts of the United States and the Caribbean where vehicles were damaged by hurricanes, Graves said.