LONDON: Gold held in a narrow range on Thursday as investors remained torn over how fast the US Federal Reserve will taper its monetary stimulus and raise interest rates after the recent strong inflation data out of the United States.
Spot gold was little changed at $1,864.50 per ounce by 0923 GMT, while US gold futures fell 0.2% to $1,866.90.
The US dollar paused for breath, slipping back from a 16-month peak as traders assessed whether its recent surge was starting to stall. A weaker dollar makes gold more attractive for buyers holding other currencies.
“At the moment, it’s difficult for gold to find direction because of the uncertainty related to the dollar’s performance, and the likely response of the US Fed and other central banks to inflation,” said ActivTrades senior analyst Ricardo Evangelista.
Bullion, considered a hedge against inflation, has gained on the back a surge in consumer prices in the US and Europe. But that has also bolstered bets for early interest rate hikes, which would increase the opportunity cost of holding non-yielding gold.
“Until the Fed actually signals an accelerated taper, gold should hold its current $1,850 and $1,875 range with the potential appointment of Lael Brainard as the new Fed Chair, considered a super dove, likely to push it above $1,875,” Stephen Innes, managing partner at SPI Asset Management.
Spot silver rose 0.2% to $25.09 per ounce.
Global silver demand could exceed a billion ounces for the first time since 2015 this year, the Silver Institute said.
“Silver has repeatedly rebounded from the technically important 200-day moving average... If it manages to exceed this threshold, it could head towards $26 by end of the year,” Commerzbank analyst Daniel Briesemann said in a note.
Platinum rose 0.8% to $1,065.49, while palladium fell 0.7% to $2,173.70.