Gold steadies as investors gauge cenbank moves

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Gold prices steadied on Thursday, buoyed by another dip in the dollar as investors assessed the implications of policy tightening by central banks to fight inflation.

Spot gold was little changed at $1,831.80 per ounce by 0937 GMT. U.S. gold futures rose 0.6% to $1,830.60.

Bullion prices rose sharply in the previous session as the dollar and yields retreated after the Federal Reserve announced the biggest rate hike since 1994 and flagged economic risks.

While the underlying economic conditions are conducive to a risk-off attitude, which typically benefits gold, the upside is capped by a strengthening dollar, said ActivTrades senior analyst Ricardo Evangelista said. He added the metal could soon test the $1,800 support level.

The dollar index slipped further on the day from recent two-decade highs, making gold cheaper for overseas buyers. [USD/]

While gold is considered an inflation hedge, higher short-term U.S. interest rates and bond yields increase the opportunity cost of holding non-yielding bullion.

Analysts say gold's moves have been influenced by the dollar and rate hike projections of late, rather than safe haven flows, with bullion also moving in tandem with stock markets on occasion.

On Thursday, the Swiss National Bank raised its interest rate for the first time in 15 years. The focus is now on an expected policy tightening by the Bank of England, a day after the European Central Bank promised fresh support to temper a bond market rout.

The conflicting currents of support from inflationary hedge buying and pressure from a higher rate regime are keeping gold prices balanced, said Michael McCarthy, chief strategy officer at Tiger Brokers, Australia.

"It's a real head-scratcher for traders at the moment to work out what exactly will drive gold out of this range," McCarthy added.

Spot silver fell 0.5% to $21.55 per ounce, platinum retreated 0.7% to $932.49, while palladium rose 0.7% to $1,872.71 per ounce.