Bullion gained late on Wednesday as the Fed stayed pat on interest rates in the world’s biggest economy.
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On Wednesday, the Fed made a decision to keep short-term rates unchanged but signaled that the case for a rate increase by the end of the year has strengthened. A steadier tone to the dollar after hefty losses earlier this week pulled gold back from the previous session’s peak of $1,343.64, however. “It’s a mixed bag because on one side no action was taken to hike rates but at the same time the hawkish sentiment has increased and the number of officials in favour of a rate hike has increased”, Capital Economics analyst Simona Gambarini said.
“Gold could come under pressure quickly if market opinion shifts more decisively in favour of a December rate hike”. In the event of any sustained rise that breaks out above the trend line on a continued dovish interest rate environment and weaker U.S. dollar, the next major short-term targets to the upside are at the $1350 and $1375 resistance areas.
Gold is likely to see profit-taking in Asia, given the higher prices and decent regional buying in the range of $1,310 to $1,320 last week and early this week, said Alex Thorndike, senior precious metals dealer, MKS PAMP Group. The timing and the pace of future Fed interest rate hikes will certainly influence the trajectory of gold prices going forward, with future rate hikes expected to negatively impact prices. “However, gold’s good recovery once again from the support area will discourage any aggressive selling”, he said, adding the metal would trade between $1,310-$1,350 in the absence of fresh news. A stronger greenback makes dollar-denominated gold more expensive for the holders of other currencies.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.69 percent to 950.92 tonnes, for a second straight session on Thursday.
U.S. gold futures slipped 0.5 percent to $1,338.20 an ounce.
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Silver fell 0.6 percent to $19.72. Platinum was $4 higher at $1,054/1,059 and palladium rose $2 to $690/697. It hit a near two-week high of $694.30 in the last session.
