Precise Investors Editorial Team
Spot gold gained 0.7% to $4,851.43 per ounce, after dropping to its lowest since February 6 earlier in the day
Gold rose on Thursday after briefly hitting a more than one-month low, as a pause in the dollar rally offered support, but gains were capped by a hawkish U.S. central bank, which limited hopes for near-term rate cuts.
Spot gold gained 0.7% to $4,851.43 per ounce as of 0433 GMT, after dropping to its lowest since February 6 earlier in the day. Prices declined 3.7% on Wednesday.
U.S. gold futures for April delivery slid 0.9% to $4,852.70.
The dollar’s momentum has paused today, which has effectively allowed gold to start recouping ground, albeit at a modest pace, said Tim Waterer, KCM Trade chief market analyst.
The pause made dollar-priced bullion cheaper for holders of other currencies.
Expectations for incoming U.S. rate cuts have been a cornerstone of gold’s ascent, but spiking oil prices have dampened hopes for monetary easing, which has somewhat pulled the rug out from under the gold price, said Waterer.
Oil jumped above $110 a barrel after Iran attacked several energy facilities across the Middle East following a strike on its South Pars gas field, adding renewed inflation concerns.
The closure of the Strait of Hormuz kept crude elevated, raising transport and manufacturing costs. While a rising inflation backdrop typically boosts gold’s appeal as a hedge, high interest rates reduce demand for the non-yielding metal.
The Bank of Canada and U.S. central bank both struck hawkish tones on Wednesday as soaring energy prices arising from the Iran war clouded the inflation outlook.
Both central banks held rates steady, but warned of risks that rising energy costs could fan a more persistent inflation spike.
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