Gold prices held steady on Wednesday, underpinned by expectations of fewer rate hikes by the U.S. Federal Reserve next year, while a stronger dollar weighed on the market.
Spot gold was up 0.1 percent at $1,244.40 per ounce at 0838 GMT, while U.S. gold futures rose 0.1 percent to $1,249.4 per ounce.
Gold is under pressure due to an appreciation in the dollar index, said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services in New Delhi, adding that prices were going to be consolidated until the Federal Open Market Committee (FOMC) meeting.
The dollar held near a one-month high against its peers, supported by a rebound in U.S. government bond yields and weakness of the pound as its battering from uncertainty about Brexit continued.
“… for now, it is the dollar that is exerting the most influence on its (gold) fate,” INTL FCStone analyst Edward Meir said in a note.
The Fed is widely expected to raise rates at its Dec. 18-19 meeting, but the market is focusing on how much further it might lift rates next year, after recent comments by Fed members to decide the monetary policy based on data have been taken as a signal for lower rate hikes in 2019.
Investors also kept a close eye on developments surrounding Brexit as an attempt to oust British Prime Minister Theresa May by her conservative party gathered pace on Tuesday, after a Brexit deal vote was postponed.
“In ETFs (exchange-traded funds), we have seen positive flows into gold, it indicates that perhaps the safe-haven status of gold is back,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore, adding that gold prices could be testing $1,260 into year-end.
Indicative of investor sentiment toward the bullion, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.43 percent to 763.56 tonnes on Tuesday, the highest since late August.
Spot gold is biased to retest a resistance at $1,253 per ounce, a break above which could lead to a gain into a range of $1,258-$1,266, according to Reuters technical analyst Wang Tao.
Among other precious metals, spot palladium was unchanged at $1,243.20 per ounce. It briefly traded at a premium to gold, having touched a session high of $1,251.75.
The metal climbed 2 percent in the previous session after China agreed to cut tariffs on U.S.-built cars and auto parts to 15 percent from the current 40 percent.
Spot silver was up 0.6 percent at $14.62 per ounce, while platinum was 0.6 percent higher at $786.30 per ounce.
