Dollar slips to its lowest level since May 7

Palladium hits over three-month high

(Adds comments, update for EMEA morning session)

May 21 (Reuters) – Gold prices rose to a more than one-week high on Wednesday, supported by a weaker dollar and safe-haven demand as U.S. President Donald Trump failed to convince Republican holdouts to back his sweeping tax bill.

Spot gold was up 0.5% at $3,306.68 an ounce, as of 0830 GMT. U.S. gold futures climbed 0.7% to $3,308.60.

“There’s been again a change in direction related to concern about the fiscal situation of the U.S. and the driver has been the Moody’s downgrade, and the market was attracted by the level of $3,300 yesterday,” said UBS analyst Giovanni Staunovo.

“This fiscal concern is weighing on the dollar, and the weaker dollar is supporting gold prices,” Staunovo added.

The dollar slipped to a two-week low against its rivals, making greenback-priced gold cheaper for holders of overseas currency.

In a closed-door meeting on Capitol Hill, Trump bluntly warned Republicans in the House of Representatives not to press for further changes to the sprawling bill, which would cut taxes and tighten eligibility for the Medicaid health program.

Investors also kept a close eye on developments in Russia-Ukraine peace talks, and any progress on trade deals as the clock ticks down to the end of Trump’s 90-day tariff respites.

Gold, traditionally considered a safe-haven asset during political and economic uncertainty, rose to an all-time high of $3,500.05 per ounce last month, boosted by central bank buying, tariff war fears and strong investment demand.

Spot palladium fell 0.8% to $1,005.70 after hitting its highest level since February 4 earlier in the session.

“Palladium has been starved for good news… Honda moving more towards hybrids and not EV is a decent reason,” said Tai Wong, an independent metals trader.

Palladium is a key component in catalytic converters used in internal combustion engine (ICE) or hybrid vehicles to reduce harmful emissions.

Silver rose 0.3% to $33.15 an ounce, while platinum was down 1% at $1,043.10.

(Reporting by Brijesh Patel and Ishaan Arora in Bengaluru; Editing by Eileen Soreng)