Gold dips below US$2,000 as greenback steadies; Fed minutes in focus

[BENGALURU] Gold fell below US$2,000 an ounce on Wednesday as the dollar steadied, with investors awaiting minutes from the US Federal Reserve's last policy meeting.

Spot gold was down 0.4 per cent at US$1,993.34 per ounce by 0505 GMT, after hitting a one-week high of US$2,014.97 on Tuesday.

US gold futures fell 0.5 per cent to US$2,002.40.

"Gold is down as the US dollar strengthened slightly this morning. In the short term, a rebound in the USD (US dollar) might inhibit the rally in gold," said DailyFx strategist Margaret Yang.

"Gold has registered a 3 per cent gain over the past two days, rendering the metal prices vulnerable to profit-taking activities."

The US dollar index edged 0.1 per cent higher against its rivals after hitting a more than two-year low in the last session. A stronger greenback makes gold expensive for holders of other currencies.

The dollar, also considered a safe-haven, has lost its appeal recently after the US central bank rolled out a wave of fiscal measures and cut interest rates to near zero to mitigate economic damage caused by the coronavirus outbreak.

"Given the ferocity of the US dollar selloff, gold should find plenty of eager buyers on any dips to US$1,990 during the session," said Jeffrey Halley, a senior market analyst at Oanda.

Markets are looking to the release of the Fed minutes at 1800 GMT.

"Although the Fed is not expected to indicate any new monetary stimulus initiatives in the minutes, investors would be paying attention to any change to Fed's approach to inflation that could be negative for the dollar," Phillip Futures analysts said in a note.

Meanwhile, strong corporate earnings and better-than-expected US economic data lifted risk sentiment among investors.

Spot gold may test a support at US$1,978 per ounce, following its failure to break a resistance at US$2,014, said Reuters technical analyst Wang Tao.

Silver rose 0.2 per cent to US$27.70 per ounce. Platinum dropped 0.4 per cent to US$952.88, and palladium slipped 0.8 per cent to US$2,170.29.

REUTERS