Gold prices edged lower on Thursday in range-bound trade as investors booked profits and the dollar strengthened, while palladium fell from a record high hit in the previous session.
Spot gold fell 0.2 percent to $1,235.57 per ounce at 0823 GMT, while U.S. gold futures were 0.1 percent lower at $1,240.8 per ounce.
“Gold has been near key levels of $1,240, so there might be some technical-level profit-taking,” said Hareesh V, head of commodity research at Geojit Financial Services in Kochi, India.
A meeting of the Organization of the Petroleum Exporting Countries (OPEC) and U.S. nonfarm payroll data expected on Friday are keeping gold investors on guard, he said.
U.S. Federal Reserve policymakers are to gather at a Dec. 18-19 meeting, at which the central bank is widely expected to raise interest rates.
“Although a rate hike is already priced in, markets will be closely watching the meeting for clues on rate-hike timings in 2019,” said Lukman Otunuga, a research analyst at FXTM, adding that: “if the meeting echoes a similar message to (Chairman Jerome) Powell’s dovish shift, gold has the potential to shine into 2019.”
The dollar held steady as a spike in risk aversion pressured equities and U.S. Treasury yields. The spread between the two-year and five-year Treasury yields inverted this week and the two-year/10-year spread was at its flattest in more than a decade amid a sharp fall in long-term rates.
“A yield curve inversion indicates higher borrowing cost in short term, so for safe-haven assets in the longer run it’s going to be very positive,” said Benjamin Lu, a commodities analyst with Phillip Futures in Singapore.
Spot gold may test a resistance at $1,245 per ounce, a break above which could lead to a gain into a range of $1,253-$1,258, according to Reuters technical analyst Wang Tao.
Meanwhile, palladium prices stayed near gold’s after outshining the yellow metal for the first time since 2002 on Wednesday, with prices soaring by around 50 percent in less than four months to record levels.
Spot palladium dropped 2.3 percent to $1,215.43 per ounce, still hovering near its record high hit in the previous session.
The market now awaits Friday’s U.S. nonfarm payrolls data for November, which is expected to show unemployment remains at 3.7 percent.
“Investors are seen adopting a cautious stance ahead of the U.S. jobs report which could offer insight over the health of the U.S. labour force,” said FXTM’s Otunuga.
Amongst other metals, silver fell 0.9 percent to $14.37 per ounce, while platinum extended losses into a third session, declining 1.4 percent to $789.24 per ounce.
