Gold prices flat, U.S. interest rate outlook weighs

Gold prices were flat on Thursday, weighed down as minutes from the last U.S. Federal Reserve meeting showed policymakers confident in the need to keep raising interest rates.

Spot gold was largely flat at $1,323.73 an ounce at 0108 GMT, a day after it fell to its lowest in a week at 1,322.20. The precious metal has dropped 1.7 percent so far this week.

U.S. gold futures were down 0.3 percent at $1,328.1 per ounce.

The dollar index, which measures the greenback against a basket of currencies, was up 0.2 percent at 90.156.

The dollar rose to an over one-week peak on Wednesday, extending its recovery from last week, helped by the Fed minutes and by higher short-term Treasury yields.

The more upbeat take on inflation in the minutes of the Jan. 30-31 policy meeting released on Wednesday will likely further cement expectations that new Fed chief Jerome Powell will lead his colleagues in raising interest rates next month.

That led investors to narrow the odds on faster hikes with a host of Fed fund futures hitting contract lows. Three rate rises are now almost fully priced in for this year, compared to two as recently as December.

Some U.S. central bankers are sticking to their view that aggressive policy tightening is unnecessary.

The Bank of England could end up needing to raise interest rates faster than investors expect, its chief economist told lawmakers on Wednesday, striking a slightly more hawkish tone than his central bank colleagues.

Euro zone business growth remained robust this month, with companies at their most optimistic in more than five years, a private-sector survey showed, despite indications higher prices and a stronger currency were taking a toll.

Asian shares slipped on Thursday as the risk of faster hikes in U.S interest rates lifted short-term Treasury yields.

Venezuela is preparing a new cryptocurrency called “petro gold” that will be backed by precious metals, President Nicolas Maduro said on Wednesday, a day after launching an oil-backed token that has been panned as a pipe dream by blockchain experts.

Source: CNBC