A salesman displays gold bars in Hyderabad, India. Picture: REUTERS/KRISHNENDU HALDER
A salesman displays gold bars in Hyderabad, India. Picture: REUTERS/KRISHNENDU HALDER

Bengaluru — Gold slipped on Thursday as investors flocked to the safety of the dollar after an equity sell-off, while the US Federal Reserve flagging concerns around the pace of the recovery in the world’s largest economy lent further support to the greenback.

Spot gold eased 0.3% to $1,837.67/oz by 3.08am GMT. Prices had fallen to their lowest since January 18 at $1,830.80 on Wednesday.

US gold futures shed 0.6% to $1,833.70. “The market seems to be very disappointed with the Fed ... we didn’t get anything additional in terms of policy guidance or stimulus prospects, so that sunk risk assets, pushed the dollar up and gold got caught in that trade,” said IG Market analyst Kyle Rodda.

The Fed kept its key interest rates and monthly bond purchases unchanged and said the pace of the recovery in US economic activity and employment had moderated in recent months. However, Fed chair Jerome Powell said the risks are in the near term as the vaccine programme ramps up and new variants threaten to spread more quickly, and there is good evidence to support a stronger economy in the second half of 2021.

Making gold unattractive, the dollar hovered close to a more than one-week high hit in the previous session as Asian shares were unsettled by a sell-off on Wall Street. Also weighing on gold was the delay in a $1.9-trillion US coronavirus stimulus deal, which has not received a green signal from Republicans over concerns about the price tag.

“Gold seems to be in a short-term period of consolidation, waiting for further cues on more fiscal and monetary stimulus to potentially push it higher in the medium to long term ... for the time being gold’s appeal has really diminished,” Rodda said.

Silver lost 0.7% to $25.05/oz and platinum fell 0.3% to $1,062.48. Palladium was down 0.1% to $2,302.75 after touching its lowest level since December 21 earlier in the session.

Reuters

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