Gold held steady but pared some gains as the dollar recovered and minutes from the US Federal Reserve’s recent meeting showed an interest rate hike was imminent in December.
Spot gold rose 0.2 per cent to $US1,223.75 per ounce, having earlier hit its highest since November 22 at $US1,228.96.
US gold futures settled up barely changed at $US1,224.10.
Minutes from the Fed’s November 7 to 8 meeting showed that almost all Fed officials at their last meeting agreed another interest rate increase was ‘likely to be warranted fairly soon,’ but also opened debate on when to pause further hikes and how to relay those plans to the public.
‘The rate hike is still ahead of us and that is a temporary headwind for gold,’ said George Gero, managing director at RBC Wealth Management.
‘The stock market firming is supporting the dollar, which is not good for gold.’
The Fed has raised rates three times this year.
Higher rates also increase the opportunity cost of holding gold, which does not pay interest.
Gold jumped on Wednesday after Powell said the central bank’s policy rate is ‘just below’ estimates of a level that neither brakes nor boosts a healthy US economy.
Many investors read the remarks as an indication that the Fed could tone down its aggressive monetary policy.
‘Geopolitical risk between Russia and Ukraine is going to cause investors to move into the gold market as well. We could see another conflict arise, a much more aggressive one than what we saw previously with Crimea,’ said Phil Streible, senior commodities strategist at RJO Futures in Chicago.
Days after Russia seized Ukrainian vessels and their crews near Crimea, the Ukrainian region which Moscow annexed in 2014, German Chancellor Angela Merkel said the West was imposing sanctions on Russia to stand up for international law.
Gold is traditionally viewed as a safe investment during economic and political uncertainty.
However, bullion has largely lost out to the dollar this year as investors sought refuge in the greenback as the US-China trade war unfolded against a backdrop of rising interest rates.
Investors are now closely watching the upcoming meeting of Chinese and US leaders at the G20 summit in Argentina.
Among other precious metals, Palladium fell 0.5 per cent to $US1,178 per ounce, moving away from a record peak of $US1,186.50 scaled earlier in the session.
Spot silver was steady at $US14.31 an ounce.
Platinum dipped 0.2 per cent to $US819, having slipped to a seven-week intraday low of $US809.50 on Wednesday.