Gold prices fell on Thursday after the Federal Reserve left interest rates unchanged but hinted at hikes later this year, and as investors awaited the US nonfarm payroll data for cues on the health of the world's largest economy.
Spot gold was down 0.4 percent at $1,339.71 per ounce, as of 0831 GMT. It touched $1,332.30 an ounce in the previous session, its lowest since Jan. 23. US gold futures for February delivery were nearly flat at $1,339.00 per ounce. The Fed said inflation is likely to quicken this year, bolstering expectations borrowing costs will continue to climb under incoming central bank chief Jerome Powell.
"We remain somewhat friendly to gold in the short-term; the dollar seems to be adrift, as investors are unsure what direction to push it," said INTL FCStone analyst Edward Meir. "We are detecting some sluggishness in the US equity markets and so this asset class might not prove to be as formidable a competitor to gold going forward," Meir added.
Traders now await the jobs report on Friday that will include data on nonfarm payrolls to see if they offer more than a brief respite to the ailing dollar. "We see the US dollar to be soft in the first half of the year until there is some information on how the US tax reforms have really worked.
Even though gold's recent rally has been too quick, we expect the strength in prices to continue and even go past previous year's highs," Ji Ming, chief analyst at Shandong Gold Group. Spot gold is biased to break a resistance at $1,347 per ounce and rise towards the next one at $1,357, as it has stabilized around a support at $1,335, according to Reuters technical analyst, Wang Tao.
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