While
an imminent hike in U.S. interest rates is putting a downdraft on gold
prices, bullion's allure as a safe haven is likely to limit the
downside, traders and analysts say, owing to uncertainties in the United
States and Europe.
Gold slumped to a 10-month low in mid-December after rates were increased for the first time in a year, but gold investors don't appear to be as jittery ahead of the next Fed meeting and a near-certain rate rise on March 14-15.
The previous slide came also as equity investors cheered the election of U.S. President Donald Trump, but gold has since recovered about 7 percent on a lack of clarity on Trump's policies and worries about upcoming elections in Europe.
"With a more hawkish Fed, there is no incentive to chase gold. But, the disappointment potential on President Donald Trump is very high. The Congress will not give what he wants."
Higher interest rates make it less attractive to hold non-interest bearing gold, while a firmer U.S. dollar also makes gold more expensive for buyers in other currencies.
Gold has fallen about 5 percent from a three-month peak on Feb. 24 to $1,198 an ounce, but traders say the risks of a sharp technical fall have eased and expect physical demand to emerge in a band from $1,150 to $1,200 an ounce.
Gold slumped to a 10-month low in mid-December after rates were increased for the first time in a year, but gold investors don't appear to be as jittery ahead of the next Fed meeting and a near-certain rate rise on March 14-15.
The previous slide came also as equity investors cheered the election of U.S. President Donald Trump, but gold has since recovered about 7 percent on a lack of clarity on Trump's policies and worries about upcoming elections in Europe.
"With a more hawkish Fed, there is no incentive to chase gold. But, the disappointment potential on President Donald Trump is very high. The Congress will not give what he wants."
Higher interest rates make it less attractive to hold non-interest bearing gold, while a firmer U.S. dollar also makes gold more expensive for buyers in other currencies.
Gold has fallen about 5 percent from a three-month peak on Feb. 24 to $1,198 an ounce, but traders say the risks of a sharp technical fall have eased and expect physical demand to emerge in a band from $1,150 to $1,200 an ounce.
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