By Sherin Elizabeth Varghese
(Reuters) – Gold prices steadied on Thursday, weighed by a stronger dollar after the Federal Reserve resisted the idea of a rate cut in March, but bullion held its ground as investors continued to cling to the hope that interest rates would be trimmed later this year.
Spot gold was flat at $2,034.50 per ounce by 1046 GMT. U.S. gold futures fell 0.6% to $2,054.30.
“Overall, the gold market is really being underpinned by continued belief in rate cuts and the lower yields we’ve seen since yesterday and this is happening despite some dollar strength,” said Ole Hansen, Saxo Bank’s head of commodity strategy.
Economic data has been raising further concerns about the direction of the reduction in rate cuts expectations but the support around the $2000 level has been relatively strong, he added.
The Fed left interest rates unchanged and dismissed the idea that it could decrease rates in the spring, but eliminated a long-standing reference to possible additional hikes.
According to the CME Fed Watch Tool, traders now expect about a 92% chance of a rate cut in May.
Dollar held 0.4% higher in response, making gold less appealing for overseas buyers, while benchmark 10-year U.S. Treasury yields languished near their lowest in more than two weeks.
Data showed U.S. private payrolls increased much less than projected in January. Investors are now awaiting the nonfarm payrolls (NFP) report for January, which is due on Friday.
“Gold is expected to trade with a neutral to bearish bias, though losses could be limited ahead of the U.S. nonfarm payroll report due on Friday,” said Jigar Pandit, Head Commodity and Currency Business at BNP Paribas’ Sharekhan.
Spot silver fell 1% to $22.70 per ounce, platinum fell 1.1% to $908.44, and palladium was down 1.2%to $964.76.
(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Mrigank Dhaniwala)
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