Washington, Jan. 3 (BNA): Gold prices hit a six-month high on Tuesday in thin trade, with market attention shifting to the minutes of the US Federal Reserve’s latest policy meeting scheduled for this week.
Spot gold was up 0.8% at $1,838.69 an ounce as of 0257 GMT. US gold futures rose 1% to $1,843.90, according to Reuters.
The dollar index fell 0.1%, making dollar-denominated bullion more attractive to overseas buyers.
“We are seeing a slight supply of gold and the $1830 level seems to be a bit of a magnet. But with very low liquidity this time of year, buying seems to be a technical rather than a fundamental impulse,” said Matt Simpson. , a senior market analyst at City Index.
“I suspect the minutes will pack as much punch as the December Fed meeting, but traders will look for confirmation of the lower Fed rate expressed in the mid-point chart which could support gold.”
Minutes of the Federal Reserve’s December monetary policy meeting are due on Wednesday, which could provide hints about the central bank’s hawkish path. The Fed raised interest rates by 50 basis points in December after four consecutive increases of 75 basis points each.
Gold is a hedge against inflation and economic uncertainties, but higher interest rates increase the opportunity cost of holding gold because it pays no interest.
Ole Hansen, head of commodity strategy at Saxo Bank, said in a note dated Monday that dollar and yield movements will be the main focus for the gold market.
“It appears that the dollar decline experienced by many central banks last year, when a record amount of gold was bought, will continue, thus providing a soft floor under the market.”
Spot silver prices rose 1.1% to $24.25, platinum rose 0.8% to $1077.98, and palladium fell 0.1% to $1792.21.