Gold prices hover near four-month high ahead of US Fed minutes

[BENGALURU] Gold prices held steady near a four-month high on Wednesday, helped by a weaker US dollar, ahead of minutes from the US Federal Reserve's last policy meeting that are expected to shed more light on policymakers' view on inflation.

Spot gold was flat at US$1,868.07 per ounce by 0503 GMT, after hitting its highest since Jan 29 at US$1,874.80 in the previous session. US gold futures were steady at US$1,867.70.

"Gold surged aggressively since the start of the week around the narrative that we could see inflation pick up in an environment where the Fed is resistant to tightening," DailyFX currency strategist Ilya Spivak said.

"Against that backdrop, we've seen stronger commodity prices in general and a weaker dollar. Certainly the price of gold has been a notable reflection of that."

The dollar index slipped to a near three-month low against its rivals, making gold less expensive for other currency holders.

Gold prices have risen about US$190 or more than 11 per cent after falling to a nine-month trough in early March, with gains driven by a pullback in the US currency and inflation expectations as bullion is seen as a hedge against inflation.

Concerns over inflationary pressure intensified after US consumer prices in April rose 4.2 per cent on-year, the fastest increase in more than a decade.

Investors await release of minutes from the US Fed's April 27-28 policy meeting that is due at 1800 GMT.

The US central bank has pledged to keep interest rates low for some time and Fed officials have repeatedly maintained they expect any rise in inflation to be short-lived.

Spot gold may break a support at US$1,859 and fall into a range of US$1,830 to US$1,847 per ounce, as it failed to break a key resistance at US$1,875, according to Reuters technical analyst Wang Tao.

Silver fell 0.7 per cent to US$28 per ounce, moving further away from a more than three-month high hit on Tuesday.

Palladium gained 0.3 per cent to US$2,911.78, while platinum eased 0.2 per cent to US$1,215.76.

REUTERS