U.S. tax doubts push gold to first weekly rise in a month

By Peter Hobson

LONDON (Reuters) - Gold prices were on track for their first weekly rise in a month on Friday after uncertainty over U.S. tax reform pushed stock markets lower and weakened the dollar, making bullion cheaper for holders of other currencies.

Spot gold was flat at $1,284.58 an ounce at 1451 GMT but up 1.2 percent this week after touching $1,288.34 on Thursday, its highest since Oct. 20.

U.S. gold futures for December delivery were 0.2 percent lower at $1,285.

The dollar was set for its first weekly fall since early October after U.S. Republican senators said they wanted to slash the corporate tax rate in 2019, later than the House's proposed schedule of 2018, complicating a push for the biggest overhaul of U.S. tax law since the 1980s.

Uncertainty over the tax plans also hit U.S. stock markets and helped end the longest run of global share price gains since 2003.

Rising share prices have dampened demand for gold by offering better returns, but some worry that a correction is overdue.

Further share price falls would likely increase the price of gold, seen as a safe investment in times of uncertainty, said Saxo Bank analyst Ole Hansen.

But a sharp rise in U.S. bond yields on Friday limited gains by reducing the attractiveness of non-yielding bullion.

"Rising bond yields are not good for gold," said Hansen. "But the market will be more focused on the risk of a potential stock market correction than the risk of higher yields."

On the technical side, Fibonacci resistance was at $1,297.70 with support at the 200-day moving average at $1,263.40, said analysts at ScotiaMocatta.

Gold prices were unlikely to fall if they could remain above a Fibonacci level of $1,283.50, they said.

In other precious metals, silver was up 0.2 percent at $17.02 an ounce and on track for a 1.3 percent gain this week, its first weekly rise in four weeks.

Platinum was 0.2 percent higher at $938.60 an ounce after hitting $939.90, the highest since Oct. 16. It was set for a weekly gain of 2.2 percent.

Palladium was down 1 percent at $1,000.25 an ounce after touching its highest since 2001 at $1,026.10 on Thursday and was up 0.3 percent this week.

(Additional reporting by Vijaykumar Vedala and Arpan Varghese in BENGALURU; Editing by Elaine Hardcastle and David Evans)