Gold Price Report (Early Morning Edition): Gold Steadied on Thursday as the Dollar Retreat as Markets Digest Fed Stance.

 Source: cnbc.com

Reuters

Gold steadied on Thursday as the dollar gave up some gains that were driven by the U.S. central bank's hints at faster-than-expected interest rate hikes, but positive news on China's Evergrande limited interest for safe-haven bullion.

Spot gold was 0.2% higher at $1,770.94 per ounce by 5:24 a.m. ET, while U.S. gold futures fell 0.5% to $1,769.50.

The dollar retreated from a one-month high as investors processed the outcome of this week's Federal Reserve meeting and subsequent statement by Fed chair Jerome Powell that a tapering of stimulus measures was not far away.

Gold has stabilized as Powell didn't give any firm dates for the beginning of tapering or raising interest rates, canceling the dollar's gains, said Ricardo Evangelista, senior analyst at ActivTrades.

But "until something more concrete happens in terms of direction for the dollar, gold will be impacted more by the level of risk appetite or risk aversion," he added.

Powell also said the central bank could begin withdrawing its asset purchases after its November policy meeting as long as U.S. job growth through September was "reasonably strong."

A weaker dollar bolsters gold's appeal for those holding other currencies.

However, that coincided with improved risk appetite in global financial markets on the back of some positive news from China's cash-strapped developer Evergrande Group, capping gold's advance.

Gold is considered a hedge against higher inflation and geopolitical uncertainties, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.

"Higher rates usually do impact gold negatively, (but)investors will almost have a foot in gold's door as a precaution given the continuing bubble in the equities and bond market," said Vincent Tie, sales manager at Singapore dealer, Silver Bullion.

Silver rose 0.7% to $22.82 per ounce, platinum gained 1.2% to $1,009.01.

Palladium edged 1.4% higher to $2,052.68.

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