Gold rises off one-month low on softer dollar; hawkish Fed caps gains

Gold prices rose on Thursday after briefly touching a more than one-month low, as a softer dollar offered support, but gains were capped by a hawkish Federal Reserve, which has limited hopes for near-term rate cuts.

Spot gold added 0.8% to $4,856.82 per ounce as of 0115 GMT, after falling to its lowest since February 6 earlier in the day.

Prices fell 3.7% on Wednesday.

US gold futures for April delivery shed 0.8% to $4,858.60.

The dollar eased, making greenback-priced bullion cheaper for holders of other currencies.

“The dollar’s momentum has paused today, which has effectively allowed gold to start recouping ground, albeit at a modest pace,” said Tim Waterer, KCM Trade chief market analyst.

“Expectations for incoming US rate cuts have been a cornerstone of gold’s ascent, but spiking oil prices have dampened hopes for monetary easing, which has somewhat pulled the rug out from under the gold price.”

Oil climbed above $110 a barrel after Iran attacked several energy facilities across the Middle East following a strike on its South Pars gas field, adding fresh inflation concerns.

Yen under pressure as BOJ and Fed hold rates steady

The closure of the Strait of Hormuz kept crude elevated, raising transport and manufacturing costs.

While a rising inflation backdrop typically boosts gold’s appeal as a hedge, high interest rates reduce demand for the non-yielding metal.

The US Federal Reserve and Bank of Canada both struck hawkish tones on Wednesday as surging energy prices arising from the Iran conflict clouded the inflation outlook.

Both central banks held rates steady, but warned of risks that rising energy costs could fan a more persistent inflation spike.

Meanwhile, US President Donald Trump’s administration is considering deploying thousands of US troops to reinforce operations in the Middle East.

Spot gold has fallen more than 9% since the US-Israeli strike on Iran on February 28, pressured by a stronger dollar, which has emerged as one of the clearest “safe-haven” winners.

Spot silver gained 1.5% to $76.52 per ounce.

Spot platinum rose 0.6% to $2,035.25 and palladium added 1.2% to $1,492.25.