The key risk for the yellow metal is the US tax bill which is expected to be passed by the lawmakers this week. A positive decision will send the U.S. Treasury yields, equities and dollar higher on the expectations that a major tax cut will spur economic growth in the country.
If all goes according to the Trump’s plan, the bill will be adopted in coming days – probably tomorrow. Then the president will sign it into law before Christmas. Such a scenario will boost risk appetite. Thus, it may alleviate immediate upside pressure on gold and allow for weakness back to the $1,2456.77 area and may be lower. Nevertheless, as the markets have largely priced in the tax bill passing, the potential downside pressure on the precious metal will likely be limited.