By Peter Hobson
LONDON (Reuters) - Gold prices rose on Monday, helped by a weaker dollar, as investors looked ahead to congressional testimony by the nominee to chair the U.S. Federal Reserve and a meeting between U.S. President Donald Trump and Senate Republicans on tax reform.
Spot gold was up 0.4 percent at $1,293.21 an ounce by 1217 GMT after hitting $1,295.60, its highest since Nov. 17.
U.S. gold futures for December delivery were up 0.4 percent at $1,292.90.
"We've seen a fairly firm recovery underpinned by a weaker dollar and some data readings from the U.S. and elsewhere that called into question the sustainability of growth," said Mitsubishi analyst Jon Butler.
U.S. PMI and capital goods data missed expectations last week, helping to drive the dollar to its weakest in two months.
A weaker dollar makes gold cheaper for holders of other currencies and can stimulate demand.
Also weighing on the dollar were the minutes from the latest Federal Reserve meeting, which showed policymakers were concerned about low inflation and could be wary of raising interest rates rapidly.
Gold is sensitive to higher interest rates because they tend to strengthen the dollar and push U.S. bond yields higher, reducing the appeal of non-yielding bullion.
Jerome Powell, the nominee to replace Janet Yellen as Fed chair next year, is due to appear before Congress on Tuesday.
Also on Tuesday, President Trump will meet Senate Republicans to discuss tax reform legislation that could accelerate U.S. economic growth.
"If we see finally some sort of movement in this area, that could reignite the trumpflation trade, risk assets could go to the races and we could see a pullback in gold as a risk hedge," Mitsubishi's Butler said.
Investors were also watching heavy selling of blue-chip shares in China, which last week suffered their biggest one-day fall in 17 months.
"Thus far we have yet to see any safe-haven premium creep into gold's price to reflect nervousness in equities and China bonds," said Jeffrey Halley, senior market analyst at OANDA.
On the technical side, fibonacci resistance was at $1,295.40 and momentum indicators suggested that gold prices would continue to rise, ScotiaMocatta analysts said in a note.
In other precious metals, silver was up 0.8 percent at $17.11 an ounce, platinum advanced 0.6 percent to $945.40 and palladium dipped by 0.1 percent to $996.
(Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by David Goodman)
Disclaimer: No Business Standard Journalist was involved in creation of this content
