By Daksh Grover
(Reuters) – Gold prices steadied on Wednesday as support from the safe-haven demand fuelled by geopolitical risks offset the pressure from a stronger U.S. dollar.
Spot gold was flat at $2,315.98 per ounce by 1127 GMT. U.S. gold futures was down 0.01% to $2,324.00 per ounce.
The U.S. dollar held firm, recouping some of the losses stemming from renewed bets on Federal Reserve rate cuts this year. A stronger dollar makes gold less attractive for other currency holders. [USD/]
“The question is when will they (Fed) cut or will they cut this year at all because as long as inflation is not really coming down further, the Fed is on hold,” said Quantitative Commodity Research analyst Peter Fertig.
Minneapolis Fed President Neel Kashkari said on Tuesday that stalled inflation buoyed in part by housing market strength means the U.S. central bank may need to hold rates steady all year.
Higher rates increase the opportunity cost of holding non-yielding bullion.
Traders are currently pricing in about a 65% chance that the Fed will cut rates in September, according to the CME’s FedWatch Tool.
“We should not forget that gold is also viewed as a safe haven and therefore the political developments in the Middle East and Ukraine play a role. There is some talk and demand by European politicians to send NATO troops into the UK that clearly might be seen as an escalation by Russia,” Fertig added.
Russia said it currently saw no prospect for a peace settlement in Gaza or the wider Middle East and said Israel’s operation in Rafah was escalating the conflict.
Meanwhile, China’s central bank added 60,000 troy ounces of bullion to its reserves in April, data showed on Tuesday.
Spot silver fell 0.1% to $27.24 per ounce. Platinum was down 0.6% to $970.40 and palladium lost 0.8% to $963.25.
(Reporting by Daksh Grover in Bengaluru; Editing by Shilpi Majumdar and Sohini Goswami)
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