Gold eased on Thursday after the U.S. Federal Reserve’s vow to support the coronavirus-ravaged economy buoyed risk sentiment, with market expectations for prices to breach the $2,000 level facing resistance in the short term.
Spot gold was down 0.3% to $1,964.70 per ounce by 0329 GMT. U.S. gold futures rose 0.3% to $1,959.20. “This price action points to a garden variety pullback – profit taking. In the short-term, we might see any move higher above that ($1980) level, towards $2,000, as something of a grind,” IG Markets analyst Kyle Rodda said.
The slight retreat was mostly technical in nature, with gold failing to break above resistance around $1,980, Rodda added.
Gold jumped to near its all-time high on Wednesday after the Fed pledged to keep interest rates near zero as the rapid rise in virus cases dampens hopes for an economic recovery.
Low interest rates reduce the opportunity cost of holding the non-yielding metal, also considered a refuge from inflation and currency debasement as central banks continue to pump out stimulus.
Fed Chair Jerome Powell promised the U.S. central bank would “do what we can, and for as long as it takes.” Limiting gold’s advance, Asian stocks followed through on gains in Wall Street.
“The likelihood of risk paring given the market expectations were not met by the Federal Open Market Committee meeting is why gold has pulled back a little bit. This is just a natural reaction to a crowded trade,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
Gold, which has risen over 28% so far this year, is well supported by a weaker dollar, a worsening pandemic and likelihood of more stimulus, analysts noted.
Elsewhere, silver dropped 0.9% to $24.20 per ounce, while platinum gained 0.3% to $926.55 and palladium slipped 0.7% to $2,143.10.