Gold, battered down from recent highs after investors fled to less risky assets, traded cautiously on Friday ahead of next week's US Federal Reserve meeting that may set direction for the dollar.
"The sentiment has not fully recovered from recent corrections and is still very fragile. Prices are going to remain range-bound ahead of the Fed meeting," said Yingxi Yu, precious metals analyst at Barclays Capital.
"We have noticed that the link between gold and the dollar has strengthened because of the lack of fresh catalysts in the market," she added.
Gold was quoted at $582.80/583.50 an ounce late in New York, up fractionally from $582.10/2.80 late on Thursday, when it dropped more than 1 percent on a rise in the dollar.
Gold hit a high of $586.10 earlier in the session, bolstered by a move up in oil prices towards $71 a barrel.
Dealers await the meeting of the Federal Reserve, which is seen raising interest rates by a quarter percentage point to 5.25 percent in its 17th straight rate rise. They will scrutinise the language used at the meeting for signals about future policy.
Higher US interest rates support the dollar and may diminish gold's allure as an alternative investment.
"Everybody is waiting for the Fed decision on interest rates, and what the forecast will be for the next months. Everybody is waiting for that to know what to do in stocks, commodities, gold," a European fund manager said earlier.
The dollar rallied to two-month highs against an index of currencies on Friday.
"Some interim volatility could be expected as the market searches for clarification as to the Federal Reserve's interest rate outlook in the coming weeks," Standard Bank said.
"In the longer-term, geopolitical concerns of Iran, Iraq and North Korea against the US should provide a certain degree of safe-haven allure."
Gold hit a 26-year high of $730 in mid-May but since tumbled 26 percent, to as low as $543 last week.
Commonwealth Bank of Australia said in a report fabrication demand for gold had recovered in the past few weeks, as consumers replenished inventories that had drastically fallen.
"Retail investors are also buying again; flows into gold ETFs are experiencing a pick-up, as smaller investors take the view that gold under $600 an ounce represents much better value," it said.
Exchange-traded funds enable investors to trade securities on an exchange and give investors a return based on commodities prices, without the need to take physical delivery.
In other precious metals, platinum dropped to $1,165/1,170 an ounce from $1,178/1,184. Palladium fell to $301/306 an ounce from $309/315.
Silver was quoted at $10.30/10.40 an ounce versus $10.32/10.42.
Comments
Comments are closed.