Gold prices rose on Thursday as the U.S. dollar eased slightly, providing some respite to the precious metal. However, investor caution surrounding the Federal Reserve’s interest rate strategy and other economic cues kept gold trading within a relatively tight range.
Spot gold increased by 0.3% to reach $1,945.69 per ounce, recovering some of its losses from the previous session, while U.S. gold futures rose by 0.1% to $1,959.90. The dollar index, which had been at its highest level in nearly three months, eased by 0.2%.
Analysts noted that gold lacked a clear direction ahead of the upcoming Fed meeting and mentioned the likelihood of central bank gold buying to support the market. The Fed is expected to pause interest rate hikes for the first time in over a year at its meeting, according to economists polled by Reuters.
The U.S. consumer inflation data on June 13 and the Fed meeting on June 13-14 were also identified as events that could influence gold’s rangebound movement. The possibility of a weak CPI report leading to a rebound in gold prices was highlighted, while the CME’s Fedwatch tool indicated a 66% chance of a rate hike pause next week and a 51% chance of a rate increase in July.
The appeal of gold is typically dampened by higher interest rates due to its lack of yield. Furthermore, benchmark U.S. Treasury yields remained near a two-week high, capping the upside for gold. Among other precious metals, silver gained 1% to reach $23.70 per ounce, platinum fell by 0.4% to $1,014.04, and palladium was down 0.6% at $1,380.97.
