Gold up, but Trump infrastructure talk knocks it off one-month high

By Devika Krishna Kumar and Pratima Desai

NEW YORK/LONDON (Reuters) - Gold prices rose on Tuesday, hitting a one-month high as the dollar weakened, but gold retraced gains as U.S. President Donald Trump laid out aggressive plans for infrastructure spending and deregulation.

Gold touched $1,261.15, its highest since Feb. 27 as the dollar weakened after the U.S. Institute for Supply Management said its index of national factory activity fell in March, while automakers reported a drop in U.S. sales.. A falling dollar makes gold cheaper for holders of other currencies.

Gold retreated from its session high after Trump said his administration was working on changes to bank regulations and his proposed infrastructure bill "may" top $1 trillion.

Spot gold was up 0.2 percent at $1,255.2 an ounce by 2:01 EDT (1801 GMT). U.S. gold futures ended the session 0.4 percent higher at $1,258.4.

"Gold is ... again trading at the technically important 200-day moving average," Commerzbank said in a note.

"Gold has been profiting not only from the weak U.S. vehicle sales figures in March, which have weighed on sentiment among market participants, but also from falling stock markets and lower bond yields."

Yet investors remained cautious ahead of a meeting between U.S. and Chinese leaders, as well as the upcoming French presidential election.

The blast in a St Petersburg train carriage on Monday that killed 14 people and wounded 50 has fuelled security concerns around the world, triggering interest in gold seen as a safe place to park assets during times of uncertainty.

Investor interest can be seen in holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, which climbed 0.53 percent to 836.77 tonnes on Monday from 832.32 tonnes on Friday. [GOL/ETF]

"We view the reacceleration of inflows into physical gold ETFs as a positive sign fundamentally, and believe that we will continue to see inflows due to geopolitical concerns, persistence of low real rates globally, and growing U.S. inflation expectations," RBC Dominion Securities said in a note.

"However, we remain cautious going into Q2 2017, which is typically weaker from a seasonality perspective, and have seen technical resistance this year as gold approaches the $1,260/oz level."

On the technical front, gold needs to close above the 200-day moving average, currently around $1,259, to gather momentum for $1,263.80, the Feb. 27 peak, chart analysts said.

Spot silver rose 0.3 percent to $18.27, having hit a one-month high at $18.412 an ounce.

Platinum gained 0.9 percent to $960.3 and palladium added 0.5 percent to $806.7.

(Additional reporting by Nallur Sethuraman in Bengaluru; editing by Dale Hudson and David Gregorio)