By Marcy Nicholson and Pratima Desai
NEW
YORK/LONDON (Reuters) - Gold rose to a seven-week high on Wednesday,
turning positive as the dollar dropped and Treasury yields fell after
U.S. President-elect Donald Trump spoke in his first formal news
conference just days before taking office.
U.S.
stocks lost ground in choppy trading, led by drug stocks after Trump
said pharmaceutical companies were "getting away with murder" by
charging high drug prices.
"At
the lows of the session, gold received a much-needed 'Trump bump' when
the president-elect triggered an equity and dollar selloff," said Tai
Wong, director of base and precious metals trading for BMO Capital
Markets in New York.
"Trump's
timely intercession prevented further losses and allowed gold to rally
to new highs of the move at $1,198, helped by a strong 10-year Treasury
auction, which sparked a bond rally."
Trump
also denounced unsubstantiated claims he had been caught in a
compromising position in Russia and said he handed off control of his
global business empire to his two oldest sons.
Spot
gold (XAU=) was up 0.4 percent at $1,192.61 an ounce by 2:32 p.m. EST
(1932 GMT), after a choppy session that traded from $1,176.94 to
$1,198.40, the highest since Nov. 23.
U.S. gold futures (GCcv1) settled up $11.1, or 0.94 percent, at $1,196.6 per ounce.
Analysts
said elections over the course of the year in France, the Netherlands
and Germany are likely to create political tensions in the European
Union and support gold.
"The
uncertainty surrounding Brexit could lead to further demand for gold
from retail investors in the UK," Quantitative Commodity Research
analyst Peter Fertig said.
Silver (XAG=) was up 0.5 percent at $16.70, but below Tuesday's four-week high of $16.90.
Platinum
(XPT=) slipped 0.4 percent to $974.50 from an earlier two-month peak at
982.60 and palladium (XPD=) dropped 1.3 percent to $754.20 an ounce,
not far from Monday's five-week high of $768.10.
Investors
expect palladium, an industrial precious metal, will benefit if tax
cuts and higher government spending in the major car markets of China
and the United States boost auto sales.
"While
the medium to longer-term demand backdrop remains compelling given its
dominant usage in catalysts of gasoline fuelled cars, we still expect a
short-term dent," Julius Baer analysts said in a note.
Palladium prices are closely linked to vehicle sales, which were strong last year.
"Sales
in China were fuelled by a tax cut, prompting consumers to pull forward
purchases. The tax cut was halved at the beginning of this year and
should result in lower sales over the course of the coming months."
(Additional reporting by Swati Verma and Nallur Sethuraman in Bengaluru; Editing by Jane Merriman and Meredith Mazzilli)
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