Gold rebounds after hawkish Fed minutes but remains rangebound

Gold prices rebounded in Asian trade on Thursday thanks to some further dollar softness and risk-on sentiment, despite hawkish signals from the latest Fed minutes released yesterday evening.

At the time of writing, spot gold (XAU/USD) was trading at $2,030 an ounce but remains largely within its recent $2,000 to $2,050 range. The rise comes as the dollar weakens against major currencies, fueling demand for dollar-priced commodities like gold.

Risk-on is the theme today.

In the January Fed minutes, policymakers reiterated they are “in no hurry” to slow rate hikes as inflation sticks and the economy shows resilience. This diminished hopes for cuts in March and May while boosting chances of steady rates in June.

The fading prospects of an imminent policy pivot increase gold’s opportunity cost. But if global growth headwinds worsen, zero-yielding bullion could still draw safety flows, limiting the downside.

For now, conflicting forces of dollar weakness boosting gold versus rate hike risks capping gains leave prices churning within recent trading levels. But further greenback declines or clear economic cracks could see bullion push toward the upper end of its $2,000-2,050 range.