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US House narrowly passes Trump's sweeping tax-cut bill

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US dollar up 0.3%

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US business activity improves in May

(Recasts, adds comment and updates for U.S. morning trade)

By Sarah Qureshi

May 22 (Reuters) - Gold fell more than 1% on Thursday as

the U.S. dollar strengthened and investors booked profits after

prices touched a two-week high earlier in the session.

Spot gold fell 0.4% to $3,301.37 an ounce, by 1043

a.m. ET (1443 GMT). Prices hit their highest level since May 9

earlier in the session and recorded gains in the previous three

sessions.

U.S. gold futures also fell 0.4% to $3,301.00.

The dollar index rose 0.3%, making bullion more

expensive for foreign currency holders.

"We're seeing some profit taking pressure from recent gains

and a firmer U.S. dollar index is another bearish factor," Jim

Wycoff, senior analyst at Kitco Metals.

"The specter of a shaky global bond market is going to be a

bullish underlying factor for the gold market that's going to

limit the downside."

Bond vigilantes continued to stalk global debt markets as

the U.S. House of Representatives passed President Donald

Trump's "big beautiful" tax bill by a single vote.

The bill will add about $3.8 trillion to the federal

government's $36.2 trillion in debt over the next decade,

according to the nonpartisan Congressional Budget Office.

Gold is used as a safe store of value during times of

political and financial uncertainty.

Data showed U.S. business activity picked up in May amid a

truce in the trade war between Washington and China, but Trump's

sweeping tariffs on imported goods raised prices for companies

and consumers.

Trade deals from the U.S. administration are expected to be

announced in the coming weeks and these will play a crucial role

in shaping gold prices for the remainder of the year, said Zain

Vawda, analyst at MarketPulse by OANDA.

Elsewhere, spot silver fell 1.1% to $32.99 an ounce,

platinum edged 0.1% lower to $1,077.92 and palladium

lost 2.7% to $1,009.89.