Gold retreated on Thursday after rising the most since late April the session before as the dollar recovered some lost ground. But expectations that the US Federal Reserve is unlikely to raise interest rates at its next meeting in June should help gold find strong support at $1,250 an ounce, said OCBC Bank analyst Barnabas Gan. "The reason for the recent glitter in gold is the downplay of the probability of a Fed rate hike in June. It should give gold a lift for the rest of the quarter," said Gan.
But spot gold came off slightly on Thursday as the dollar bounced back versus a basket of major currencies, making dollar-priced assets such as gold more costly for holders of other currencies. Spot gold was down 0.5 percent at $1,271.40 an ounce by 0641 GMT, after climbing off two-week lows overnight. Wednesday's nearly 1 percent gain was bullion's strongest since April 29. US gold for June delivery dropped 0.2 percent to $1,273.20 an ounce. Gold has risen nearly 20 percent this year, benefiting from expectations that the Fed is unlikely to raise interest rates anytime soon.