London — Gold was steady on Thursday after the minutes of the latest
Federal Reserve policy meeting further dampened the expectation for an
interest rate increase in March, lowering US bond yields and stalling
upward momentum in the dollar.
The dollar edged marginally higher against the euro on Thursday, but remained off the previous session’s one-week highs.
Spot gold was flat at $1,237.61/oz at 11.20am GMT, while US gold futures rose 0.4% to $1,238.8.
"The
dollar’s backed off, bond yields have backed off, and that’s given a
bit of support for gold," said Robin Bhar at Société Générale. A weaker
dollar makes gold cheaper for holders of other currencies, while lower
yields reduce the opportunity cost of holding nonyielding bullion.
Higher interest rates would lift yields. Gold prices have traded within a
range of around $1,220/oz-$1,240/oz since early February. Unease over
the political outlook in the US and Europe has supported demand for
bullion as a safe-haven asset, but the prospect of rising interest rates
has kept a lid on gains.
Investors were looking ahead to an
address by US President Donald Trump to Congress on February 28 that
could force gold out of its trading range. "Currencies, the bond market,
gold, will all take their cue from what he says on Tuesday," said Bhar.
More details on promised government spending, infrastructure
investment or tax cuts would probably push the dollar and US asset
prices higher and gold lower. "Should Trump become the feared ‘unguided
missile’, which we still believe is unlikely, safe-haven demand would
increase even more," Julius Baer analyst Carsten Menke said in a note.
Technical
analysts at Reuters and ScotiaMocatta said gold was likely to break
above its recent range. "A push above $1,240-$1,245 will be required to
entice fresh interest," Sam Laughlin at MKS PAMP said in a note.
In
other precious metals, silver was down 0.3% to $17.97/oz. Platinum was
0.9% lower at $993.26/oz, and palladium was down 0.4% at $765.75.
Reuters
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