Gold near 1-week high after Fed plans for long-term support

Gold edged lower on Thursday as investors booked profits after prices rallied to their highest in one week on the U.S. Federal Reserve's commitment to provide extraordinary support for the country's economy, hit by the coronavirus.

Spot gold fell 0.2pc to $1,733.18 per ounce at 0930 GMT, after hitting its highest since June 2 at $1,739.68 earlier in the session. U.S. gold futures climbed 1.2pc to $1,741.40.

"You have short term traders and those who jumped into the gold market when prices were at $1,680, they are happy to take profits at $1,740," Julius Baer analyst Carsten Menke said.

"The market is really tossed and torn between the pessimist and optimist and that's the main reason why we are still moving around this 1,700 level for quite sometime now."

On Wednesday, spot gold prices rose 1.3pc, their biggest daily percentage rise in more than a month, after the U.S. central bank repeated its promise of continued support, and also flagged the need to keep the key interest rate near zero through at least 2022.

Large stimulus measures and low interest rates tend to support gold, which is often considered a hedge against inflation and currency debasement.

"Macro uncertainty, lower interest rates and accommodative central banks should remain long-term supports (for gold)," ANZ analysts wrote in a note.

As the pandemic shows no signs of slowing down, so will uncertainty and that along with rising trade tensions should keep strong safe-haven demand for gold, ANZ analysts said.

Investors are waiting for U.S. weekly jobless claims data due later in the day. While layoffs are slowing, millions still remain unemployed, suggesting the labour market could take years to heal from the pandemic.

Elsewhere, silver declined 2.1pc to $17.88 per ounce, after rising 3.8pc on Wednesday.

Palladium fell 1.2pc to $1,924.51 per ounce, and platinum dipped 0.1pc to $831.81.