Gold price up on lower dollar, U.S. rate rise views limit gains

New York (May 26)  Gold edged higher on Thursday as the dollar's rally paused, moving away from a seven-week low hit in the previous session, though gains were limited by expectations the U.S. rates could rise as early as June.

Spot gold rose 0.3 percent to $1,227.20 an ounce by 0945 GMT, its biggest intraday rise since May 17. The metal fell to the lowest since April 6 at $1,217.25 on Wednesday. U.S. gold was up 0.2 percent at $1,226.70.

"Gold has entered a phase of consolidation due to stronger
views that the U.S. Fed will raise rates this summer," Carlo
Alberto de Casa, ActivTrades chief analyst said.
    "Today we are just seeing a technical rebound after the
metal touched $1,217 yesterday, where the next charts support
stands."
    The prospect of an interest rate rise, as indicated by U.S.
Fed meeting minutes released last week, and a strengthening
dollar have pushed gold down 5 percent so far in May, putting it
on track for its biggest monthly decline since November.
    Higher interest rates increase the opportunity cost of
holding non-interest yielding gold.
    Dallas Fed President Robert Kaplan said on Wednesday he
would support raising interest rates in the "near future",
though a vote by Britain on whether to leave the European Union
will weigh on any Fed rate decision in June.
    The market will also monitor Fed Chair Janet Yellen's
comments at a panel event hosted by Harvard University on
Friday.
    The dollar index inched down 0.1 percent, moving away
from a two-month high of 95.661 notched in the previous session,
and making gold cheaper for foreign currency holders.
    European shares were mixed on Thursday with banks on the
back foot following a recent rally while commodity stocks were
boosted as Brent crude oil prices hit $50 a barrel for the first
time since November.
    Investors will be looking for cues from U.S. weekly
unemployment data and pending April home sales figures,
scheduled for later in the day.
    Top consumer China's gold imports via main conduit Hong Kong
dipped in April from a three-month high in the previous month,
data showed on Thursday.
    Among other precious metals, spot silver rose 0.9
percent to $16.41 an ounce and spot platinum was up 1.5
percent at $998.28 an ounce.
    Spot palladium jumped the most in more than a month,
rising about 3 percent to $542.22 per ounce.

Source: Reuters