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Gold hovers below 10M-highs as dollar stabilises after Fed minutes

Gold hovers below 10M-highs as dollar stabilises after Fed minutes

Mubasher: Gold has been traded below the 10-month high seen in the previous session on Thursday as the dollar erased losses after the US Federal Reserve meeting minutes reignited expectations of a further rate hike this year.

Investors were also closely awaiting the outcome of trade talks between the US and China, the world's two largest economies.

At 7:16 am GMT, spot gold edged down 0.03% to $1,338.10 per ounce, while US gold futures declined 0.49% to $1,341.30 per ounce.

“There are both technical and fundamental reasons for this pull back in gold prices. It is under some technical selling pressure at the moment,” Margaret Yang, market analyst with CMC Markets, Singapore, told Reuters.

Commenting on the Fed’s minutes of its January policy meeting released late on Wednesday, Yang said “it was a clearly dovish statement”, adding that dollar recovered after the minutes and gold investors are now taking profits.

By 7:19 am GMT, the US dollar index, a gauge for the greenback against six major peers, inched up 0.18% to 96.6310.

The Fed meeting minutes signaled that the US economy and its labour market remained strong, rekindling some expectations of at least one more interest rate hike this year.

“Spot gold may retrace into a range of $1,321-$1,331 per ounce and could have peaked around resistance at $1,351 per ounce,” according to Reuters analyst Wang Tao.

In the same vein, markets were watching carefully signs of progress in the latest round of trade talks between the US and China.

Midlevel US and Chinese officials began this week's trade meetings, while cabinet-level negotiators will join the discussion on Thursday, 21 February.

US President Donald Trump is also expected to meet his Chinese counterpart Xi Jinping in March to strike a long-awaited deal.

Trump gave his firmest indication yet that the US may not step up tariffs on Chinese goods on 1 March, as scheduled.

The deadline to complete talks with China is “not a magical date,” the US president told reporters on Tuesday.

“After finding major support at the $1,300 per ounce mark, (gold) prices have witnessed an upthrust, and moved past the invincible $1,326 per ounce mark,” Sugandha Sachdeva, vice-president, metals, energy and currency research, Religare Broking Ltd, told Reuters.

This has laid the ground for gold to resume the upwards trajectory towards $1,365 per ounce in the near-term, Sachdeva added.

Holdings of the SPDR Gold Trust, which reflected investor appetite for the safe-haven metal, edged up 0.26% to 794.50 tonnes on Wednesday.

Among other precious metals, palladium added 0.1% to $1,490.00 per ounce, while spot platinum and silver dipped 0.2% to $821 per ounce and 0.1% to $16.01, respectively.