Gold fell on Thursday as stockmarkets gained for a third straight day, but the metal traded in a tight range ahead of next week’s Federal Open Market Committee meeting when the Federal Reserve Bank is expected to have a modest increase in interest rates.
Meanwhile, palladium touched a fresh record high, trading at record premium to other precious metals bullion, buoyed by a sustained deficit and hopes of fresh demand from the auto sector.
Spot gold eased 0.3 percent to $1,241.50 per ounce at1056 GMT, while U.S. gold futures were down 0.3 percentat $1,245.80 per ounce.
Higher rates make non-yielding bullion less attractive, andtend to boost the dollar, in which gold is priced, making itmore expensive for holders of other currencies.
Meanwhile, equity markets rallied on signs of easing tradetensions between the United States and China.
With equities rebounding this week, gold has fallen slightly out of favor as traders unwound their safe haven bets.
Gold’s direction in the near term would be determined bymoves in the greenback, which could be pressured if the Federal Reserve takes a more cautious approach, analysts said.
Gold’s recent breakout above the $1,240 resistance means the path of least resistance is still to the upside and it should get a lift if the dollar were to fall on the back of a dovish Fed.
The European Central Bank’s interest rate decision is alsoon investors’ radar, with the bank set to announce formally anend to its vast quantitative easing programme at a policymeeting later on Thursday.
Among other precious metals, spot palladium was steady at $1,261.10 per ounce, having touched a record high of$1,269.25 earlier in the session.
The auto catalyst metal rose strongly on news that China would be reducing tariffs on U.S. imported autos.
Silver was down 0.3 percent at $14.69 per ounce, while platinum gained 0.1 percent to $798.90.