By Ashitha Shivaprasad
(Reuters) – Gold prices hit a six-month high on Tuesday in thin trading, with the market’s attention turning to minutes from the U.S. Federal Reserve’s latest policy meeting due this week.
Spot gold was up 0.8% at $1,838.69 per ounce as of 0257 GMT. U.S. gold futures rose 1% to $1,843.90.
The dollar index slipped 0.1%, making greenback-priced bullion more attractive for overseas buyers.
“We’re seeing a slight bid for gold and the $1,830 level appears to be a bit of a magnet. But with liquidity very low this time of the year, it appears to be technical buying as opposed to fundamentally driven,” said Matt Simpson, a senior market analyst at City Index.
“I doubt the minutes will pack as much of a punch as the Fed’s December meet had, but traders will look for confirmation of the lower terminal Fed rate expressed in the median dot plot and that could support gold.”
Minutes from the Fed’s December policy meeting are due on Wednesday, which could offer hints on the central bank’s tightening path. The Fed raised rates by 50 basis points (bps) in December after four consecutive increases of 75 bps each.
Gold is considered a hedge against inflation and economic uncertainties, but higher interest rates increase the opportunity cost of holding gold as it pays no interest.
The dollar and yield movements will be a key focus for the gold market, Ole Hansen, head of commodity strategy at Saxo Bank said in a note dated Monday.
“The de-dollarization seen by several central banks last year, when a record amount of gold was bought, look set to continue, thereby providing a soft floor under the market.”
Spot silver rose 1.1% to $24.25, platinum gained 0.8% to $1,077.98 and palladium was down 0.1% to $1,792.21.
(Reporting by Ashitha Shivaprasad in Bengaluru; editing by Uttaresh. V and Rashmi Aich)
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