Gold prices edged higher on Thursday, supported by a softer dollar, although bullion hovered near the previous session’s lows as investors awaited cues from the US Federal Reserve.

Spot gold was up 0.3% to $1,946.09 per ounce by 0441 GMT, after shedding 1% in the previous session.

US gold futures held steady at $1,960.60. Gold has support from expectations of the Fed holding rates next week with prices stuck in the $1,930 to $1,985 range, and bullion could breach the upper range once the US central bank decision is out, said Ajay Kedia, director at Kedia Commodities in Mumbai.

According to economists polled by Reuters, the Fed will not raise interest rates for the first time in more than a year at its June 13-14 meeting.

The Bank of Canada on Wednesday hiked its overnight rate to a 22-year high of 4.75%, and markets and analysts immediately forecast yet another increase next month to ratchet down an overheating economy and stubbornly high inflation.

“Even if there is a pause at the next (Fed) meeting, there are likely to be further rate hikes as inflation remains at extreme levels,” said Clifford Bennett, chief economist at ACY Securities.

The dollar index eased slightly making gold less expensive for investors holding other currencies.

US consumer inflation report for May, due on June 13, ahead of the Fed meeting, will provide investors with more clarity on the health of the world’s largest economy.

Higher interest rates dull the appeal for zero-yield bullion.

Gold prices lose further ground

Citi, meanwhile, cut the 0-3 month gold point-price target to $1,915 from $2,100, adding that the bullish bullion sector tailwind will re-emerge before end-2023.

Gold still remains a viable macro portfolio tail hedge, despite a hawkish Fed regime, Citi said in a note.

Among other precious metals, spot silver rose 0.4% to $23.5433 per ounce, while platinum was flat at $1,018.07. Palladium fell 0.2% to $1,385.89.