Gold prices edged lower from their highest levels in almost seven weeks on Tuesday as the dollar rose and investors locked in profits from bullion’s rally last month.
Spot gold dipped 0.3 percent to $1,264.90 per ounce by 1216 GMT. It rose 2.2 percent last month, its biggest monthly gain since February.
U.S. gold futures for August were down 0.1 percent at $1,264.90 per ounce.
“In the short term there are technical indications that gold is overstretched, and when we’ve had a move of nearly three weeks of straight gains there’s danger of profit taking,” said analyst Jonathan Butler at Mitsubishi in London.
At its peak on Monday, gold had gained about $66 since rebounding from a near four-month low of $1,204.45 on July 10.
The dollar edged up against a trade-weighted currency basket on Tuesday, but held close to a 14-month low as investors added to bets that political turmoil in Washington will hit prospects of another Federal Reserve rate hike in coming months.
A firmer dollar makes commodities such as gold that are priced in the greenback more expensive to buyers outside of the United States.
Butler said despite any short-term correction, gold was poised to move higher.
“Yesterday for the first time on a monthly close, gold broke above a downtrend that had prevailed since the high in 2011. This is quite a bullish technical signal and potentially demonstrating the start of a new trend.”
Political instability in the United States after President Donald Trump ousted recently hired White House communications chief Anthony Scaramucci on Monday could support gold in coming months, Butler added.
Gold is often used as an alternative investment during times of political and financial uncertainty.
Investors are also looking ahead to the U.S. non-farm payrolls data later this week and how that will affect the dollar, according to Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
In other precious metals, silver fell 1 percent to $16.62 per ounce. It hit a more than one-month high in the previous session and rose 1.3 percent in July.
“Silver was given some support by firm base metals prices yesterday, causing the gold/silver ratio to drop slightly to its lowest level since the end of June,” Commerzbank said in a note.
Palladium gained 0.5 percent to $887.50 per ounce, after it hit a near seven-week high of $897.05 in the previous session. It rose almost 5 percent in July.
Platinum climbed 0.4 percent to $939.50 per ounce, after rising to $943.80, a high since June 14. It rose almost 5 percent in July, its first monthly gain since February.