Gold prices were steady on Thursday, supported by uncertainty surrounding US President Donald Trump’s economic policy after Wednesday’s Federal Reserve minutes failed to give the market much direction, despite its support for interest rate hikes.
“Gold continues to tread water post the Federal Open Market Committee minutes, probably the highlight of a very light data week,” said Jeffrey Halley, senior market analyst at OANDA.
Many Fed policymakers said it may be appropriate to raise interest rates again “fairly soon” should jobs and inflation data come in line with expectations, according to the minutes of the Fed’s last policy meeting.
The minutes of the Jan. 31-Feb. 1 discussion also showed the depth of uncertainty at the Fed over the lack of clarity on the new Trump administration’s economic program.
Gold is highly-sensitive to rising US interest rates, as it increases the opportunity cost of holding non-yielding bullion, while also boosting the dollar.
The dollar drifted on Thursday as the impact from the Federal Reserve’s policy meeting minutes and supportive comments from a top US official faded.
The dollar index , which tracks the dollar versus a basket of major global currencies, ended slightly lower after the Fed minutes and was up by only 0.1 per cent on Thursday.
Spot gold edged down 0.1 per cent to $1,236.51 per ounce at 0350 GMT, while US gold futures rose 0.4 per cent to $1,237.60.
Spot gold remains neutral in a range of $1,233-$1,240 per ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.
Investors were also looking ahead to an address by US President Donald Trump to Congress next week at which he is expected to announce tax policies.
“Markets are hoping that we get some long awaited concrete detail on the new administration’s economic and fiscal policy,” Halley said.
Political uncertainty including lingering doubts over Trump’s policies as well as elections in France and the Netherlands, has offered broad support for the yellow metal, which has risen over 7 per cent this year.
French far right leader Marine Le Pen has increased her lead in the first round of France’s presidential election, though she is still seen being beaten by a wide margin in a runoff, a BVA-Salesforce poll published on Thursday showed.
Platinum eased 0.8 per cent to $994.85 per ounce, while palladium inched lower by 0.2 per cent to $766.80.