Gold prices edged down today after a short-lived rise to around $1,314 earlier this week.
The yellow metal lost its shine after Donald Trump yesterday proposed the biggest US tax overhaul in three decades. The US dollar rose following the President's announcement, continuing a rally from a two-and-a-half-year low due to the belief that lower taxes could spur faster economic growth.
Trump's plan drew criticism for favouring businesses and the wealthy and because it could add trillions of dollars to the deficit.
It also followed a hawkish speech from Janet Yellen, chair of the US Federal Reserve, which opened the door for a December rate hike.
"Gold has fallen to a fresh one-month low of $1,278 as the US dollar continues to rally from 33-month lows, while hawkish central bank speak further adds to the bearish drivers for the non-yielding asset. After ticking marginally higher in the early part of Asian trading, the precious metal has since dropped below $1,280 for the first time since late August," said analysts at Accendo Markets, adding that a host of central bank speeches today could further influence gold.
Gold continues to be buoyed on geopolitical tensions, however.
Ole Hansen, head of commodity strategy at Saxo Bank, said:
Geopolitical risks remain and that should continue to attract investors seeking tail-end risk protection. On that basis we do not see an immediate threat to gold from escalated long liquidation.
We view the gold-unfriendly dollar rally during the past few weeks as healthy but also temporary. In the US Trump remains unpopular and it does not yet look like he has turned a corner on that front.
At the time of writing, gold prices were down just 0.04 per cent at $1,287.30 per ounce.