Gold prices held steady on Friday, as investors locked in profits from the precious metal’s rally to six-week highs on Thursday and as markets awaited the release of U.S. second-growth data due later in the day.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were little changed at $1,259.28, off the previous session’s six-week high of 1,265.00.
The August contract ended Thursday’s session 0.85% higher at $1,260.00 an ounce.
Futures were likely to find support at $1,243.20, Wednesday’s low and resistance at $1,265.00, Thursday’s high.
The dollar remained under pressure after the Fed said on Wednesday that inflation remains below its 2% target even as near-term risks to the economic outlook appear “roughly balanced.” In the past, the Fed judged that weakness in inflation was transitory.
The central bank’s cautious tone on inflation sparked fresh uncertainty over the possibility of a third rate hike this year.
The Fed also said it expected to start shrinking its balance sheet “relatively soon”, prompting expectations for an announcement in September.
The greenback was also weakened by data on Thursday showing that initial jobless claims rose by 10,000 to 244,000 last week. Analysts expected jobless claims to rise by 7,000 to 241,000 last week.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.15% at 93.64, not far from Thursday’s 13-month low of 93.00.
Gold is sensitive to moves higher in both U.S. rates and the dollar. A weaker dollar makes gold less expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.
Elsewhere in metals trading, silver futures for September delivery slipped 0.23% to $16.533 a troy ounce, while copper futures for September delivery declined 0.54% to $2.862 a pound.
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