Gold price stays steady on weak dollar

Gold held steady on Thursday as the dollar weakened after minutes from a US Federal Reserve meeting suggested that the central bank could take a more cautious approach to interest rate increases.

Fed policymakers had agreed at the meeting that they should hold off from raising interest rates until it is clear that a recent US economic slowdown is only temporary, though most said an increase is coming soon.

Higher interest rates tend to boost the dollar and push bond yields up, increasing the opportunity cost of holding non-yielding bullion and thereby pressuring gold prices.

Spot gold was flat at $1,258 an ounce by 1150 GMT, clinging to Wednesday's 0.6 per cent gain. US gold futures were up 0.4 per cent at $1,258.

Capital Economics analyst Simona Gambarini said that gold's resilience could falter in the coming weeks, citing indications in the Fed minutes that tighter monetary policy is on the cards.

Expectations for US interest rates to rise next month and potentially again later in the year have been a major factor in keeping gold prices pinned below chart resistance at $1,300.

But on the technical front, analysts see the price remaining stable in the next few sessions at least.

"After the golden cross of the 50-day moving average over the 200-day moving average and yesterday's firm buying early on towards $1,250, it looks as if prices are consolidating the recent rally," said Sucden Financial analyst Kash Kamal.

Support was near $1,250 an ounce and near-term resistance at $1,265, Kamal said. - Reuters

Source: Khaleej Times