Gold dips below $2,000 as dollar steadies; Fed minutes in focus

Gold fell below $2,000 an ounce on Wednesday as the dollar steadied, with investors awaiting minutes from the U.S. Federal Reserve's last policy meeting.

Spot gold was down 0.7% at $1,987.36 per ounce by 0654 GMT, after hitting a one-week high of $2,014.97 on Tuesday. US gold futures fell 0.8% to $1,997.70.

"Gold is down as the US  dollar strengthened slightly this morning. In the short term, a rebound in the USD might inhibit the rally in gold," said DailyFx strategist Margaret Yang.

"Gold has registered a 3% gain over the past two days, rendering the metal prices vulnerable to profit-taking activities."

The dollar index edged 0.1% higher against its rivals after hitting a more than two-year low in the last session. A stronger greenback makes gold expensive for holders of other currencies.

The dollar, also considered a safe-haven, has lost its appeal recently after the U.S. central bank rolled out a wave of fiscal measures and cut interest rates to near zero to mitigate economic damage caused by the coronavirus outbreak. 

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"Given the ferocity of the U.S. dollar sell-off, gold should find plenty of eager buyers on any dips to $1,990 during the session," said Jeffrey Halley, a senior market analyst at OANDA.

On investors' radar are minutes from the Fed's recent meeting due for release at 1800 GMT.

"Although the Fed is not expected to indicate any new monetary stimulus initiatives in the minutes, investors would be paying attention to any change to Fed's approach to inflation that could be negative for the dollar," Phillip Futures analysts said in a note.

Meanwhile, strong corporate earnings and better-than-expected U.S. economic data lifted risk sentiment among investors.

Spot gold may test a support at $1,978 per ounce, following its failure to break a resistance at $2,014, said Reuters technical analyst Wang Tao.
Elsewhere, silver eased 0.3% to $27.57 per ounce. Platinum dropped 0.7% to $949.95 and palladium slipped 1% to $2,167.38.

Reuters