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By Apeksha Nair
(Reuters) - Gold prices held within a tight range in Asian trade on Tuesday, supported by a slightly weaker dollar as investors awaited the next steps over U.S. tax reform legislation for clues.
Spot gold was nearly unchanged at $1,275.24 an ounce by 0405 GMT. It shed 0.3 percent in the previous session.
U.S. gold futures were steady at $1,277.90.
The dollar dipped on Tuesday, after climbing to 2-1/2-week high against the yen on Monday after the U.S. Senate approved a major tax reform bill, moving Republicans and President Donald Trump closer to their goal of slashing taxes for businesses.
"Gold is expected to trade in a narrow range between $1,260- $1,290 per ounce - with near term movements more towards the lower end of the range. The passage of the U.S. tax bill would likely boost equities and be detrimental to gold," said John Sharma, an economist with National Australia Bank.
However, an ongoing investigation into contacts between Trump's election campaign and Russia, after Michael Flynn, former national security adviser to the President, pleaded guilty to lying to the FBI, sparked concerns among lawmakers and weighed on market sentiment.
"Currently, gold is still supported by ongoing geopolitical tensions and controversies surrounding Michael Flynn," Sharma said.
Investors are also looking ahead to the upcoming U.S. non-farm payrolls report later this week which would be the last employment report before the Federal Reserve's monetary policy meeting next week.
"The latter will likely result in a rate rise and a modest downward pressure on gold, since the rate rise decision is largely priced in by markets," Sharma said.
The Fed is almost certain to raise interest rates later this month, according to a Reuters poll of economists, a majority of whom now expect three more rate rises next year compared with two when surveyed just weeks ago.
Higher interest rates tend to boost the dollar and push bond yields up, making greenback denominated, non-yielding gold more expensive for holders of other currencies.
Spot gold looks neutral in a narrow range of $1,272-$1,277 per ounce, Reuters technicals analyst Wang Tao said.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.14 percent to 846.93 tonnes on Monday.
Meanwhile, silver was up 0.2 percent to $16.34 an ounce.
Platinum was 0.4 percent higher at $927.30 an ounce and palladium was up 0.7 percent to $998.48.
(Reporting by Apeksha Nair in Bengaluru; editing by Richard Pullin)
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