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Gold prices inched lower on Thursday amid expectations of higher US interest rates, but managed to hold above a key psychological level of $1,200 which acted as a strong support.
Spot gold was down 0.2 per cent at $1,203.86 an ounce at 0329 GMT, after rising nearly 0.5 per cent in the previous session. US gold futures were down 0.1 per cent at $1,209.90 an ounce.
Spot gold has been trading in an $8 range for the past two sessions, with investors keenly watching the $1,200 level after the metal broke below that and hit a 1-1/2-year low of $1,159.96 early this month.
“There is certainly some ambiguity following last week's Jackson Hole symposium where (Federal Reserve Chair Jerome) Powell was a little bit dovish in investors' point of view,” ANZ analyst Daniel Hynes said.
“Investors are grappling amid positive data coming through (from the United States) and that's why prices are stuck just above $1,200 at the moment without any sort of clear outlook, especially around the rates for 2019.”
US GDP growth
Data showing a higher-than-expected annualised growth in second-quarter US gross domestic product cemented expectations for a rate hike next month, with a 96 per cent probability, according to Fed funds futures.
Higher rates dent the appeal for non-interest-yielding gold, boosting the dollar in which the yellow metal is priced. The dollar index against a basket of six major currencies stayed above a four-week low of 94.434 hit on Tuesday.
NAFTA talks
The greenback has been on the defensive this week with safe-haven demand for the currency diminishing in the wake of improving risk sentiment in broader markets following promising NAFTA negotiations.
Bullion investors' focus would now shift to the trade negotiations between the United States and China and the consequences, Hynes said.
Gold prices are heading for a fifth straight monthly fall, which would make it the precious metal's longest losing streak since early 2013. The metal has declined about 7.4 per cent so far this year amid international trade disputes and the Turkish currency crisis, with investors preferring the dollar as a safe haven.
“While a (relatively) stronger dollar and U.S. economic growth are hurting the bullion's appeal, concerns that Turkey's financial crisis could spread may give the metal a reversal of fate,” said Renisha Chainani, head of commodity and currency research at Monarch Networth Capital.
“Gold's short-cover risks are elevated. The setup, with prices near key support (at $1,200) and record-short net positions, is a recipe for a sharp rally.”
Spot silver was down 0.2 per cent at $14.69. Platinum was down 1 per cent at $792.90, while palladium was down 0.8 per cent at $957 after hitting its highest since July 9 at $967 on Wednesday.
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