Investing.com - Gold prices held steady on Friday, hovering close to a three-week trough as the perspective of a June rate hike in the U.S. and a stronger U.S. dollar continued to weigh on the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery were steady at $1,255.35.
The June contract ended Thursday’s session 1.54% lower at $1,254.80 an ounce.
Futures were likely to find support at $1,247.50, Thursday’s low and resistance at $1,276.40, the high from May 18.
Gold prices were hit after the Fed’s April meeting minutes on Wednesday showed that officials said a June rate hike would be appropriate if economic data indicated that growth was picking up in the second quarter and employment and inflation were firming.
In addition, New York Federal Reserve President William Dudley said on Thursday that the U.S. economy could be strong enough to warrant a rate hike in June or July.
Gold is sensitive to moves in U.S. rates, as a rise would lift the opportunity cost of holding non-yielding assets such as bullion.
The growing possibility of a June rate hike lifted the dollar to a seven-week high against its major counterparts. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 95.27, close to Thursday’s seven-week peak of 95.51.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Prices of the yellow metal are up nearly 19% so far this year amid indications the Fed will take a slow and cautious approach to raising interest rates this year due to concerns over the global economy. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Elsewhere in metals trading, silver futures for July delivery rose 0.28% to $16.540 a troy ounce, while copper futures for July delivery gained 0.49% to $2.070 a pound.