Gold took a breather after hitting another record high on Wednesday, as rising tensions in the Middle East and hopes of a US rate cut continued to push investors to the safe haven.
Spot gold was 0.4% lower at $2,271.50 an ounce as of 0958 GMT, after hitting a record high of $2,288.09 earlier in the session. Analysts attributed the slight pullback to a rise in US yields.
U.S. gold futures rose 0.5% to $2,292.
Central bank buying and strong physical demand have also fueled the roughly 10% rise in bullion so far this year.
“It seems like gold turns every market development into a price increase,” said Alexander Zumpfe, a precious metals trader at Heraeus.
Federal Reserve policymakers said Tuesday they believe it is “reasonable” to cut U.S. interest rates three times this year, even as recently stronger economic data has cast doubt on that outcome.
Gold tends to gain when interest rates are low, which lowers the opportunity cost of holding the non-yielding precious metal.
“The US economy is surprising with its strong performance, which would make a first rate cut in June less likely and therefore weigh on gold prices – but the precious metal is holding its value,” Zumpfe said.
Investors are now awaiting comments from Fed Chairman Jerome Powell later in the day for clues on when the central bank will make its first rate cut.
Meanwhile, oil prices rose as escalating geopolitical risks – including Ukrainian drone attacks on Russian refineries and tensions between Israel and Iran – increased concerns about tighter supplies.
“With commodity prices generally rising, this brings the risk of another round of inflation – so investors may be hedging against inflation,” said City Index senior analyst Matt Simpson.
Elsewhere, silver rose 0.5% to $26.24 an ounce, platinum was steady at $918.74 and palladium fell 1.1% to $992.32.
