Latest gold, currency rates in UAE today: Gold retains losses

Gold retained losses from overnight on Thursday, as the Federal Reserve characterised a recent slowdown in the US economy as transitory, not ruling out an interest rate hike this year.

Spot gold was trading flat at $1,204.10 an ounce by 0247 GMT (6:47am UAE time), after losing 0.6 per cent on Wednesday. The metal had hit a three-week high in the run up to the Fed statement on expectations recent soft economic data would prompt the US central bank to delay any rate hike.    

The Fed downgraded its view of the US labour market and economy after its two-day policy meet and said the poor performance was in part due to transitory factors.

But the Fed's guidance differed little from its last meeting, and the central bank did not effectively rule out hiking rates at its next meeting. “The FOMC statement may have been interpreted as slightly hawkish by the gold markets,” said HSBC analyst James Steel, referring to the Fed's policy-setting Federal Open Market Committee.    

Investors believe higher rates could dent demand for bullion, a non-interest-paying asset. Bullion traders now believe gold could see further downside as it has failed to hold on to the three-week high.    

“(The $1,215 level) is forming considerable resistance and should have been tested overnight with the plummeting greenback, but sizable offers at this level continue to cap the market," said MKS Group trader Jason Cerisola.    

The dollar fell to a nine-week low on Wednesday after data showed the US economy grew 0.2 per cent in the first quarter, down sharply from the fourth quarter's 2.2 per cent and below market expectations for 1 per cent growth.

Physical bullion demand in Asia has quietened in recent days as gold held above $1,200 an ounce. A significant pick-up in demand would support global prices.

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