Spot gold held steady at $1,255.59 an ounce as of 0435 GMT. The metal touched a one-week high at $1,261.10 in the prior session and gained over $20 from Tuesday's low of $1,237.32 an ounce, its weakest since Dec. 12.
U.S. gold futures were up 0.3 percent at $1,256.70 an ounce.
The dollar index, which measures the greenback against a basket of six major currencies, was down 0.1 percent at 94.539.
· "There's not much incentive to move the market, it is very quiet this morning after the July 4 holiday. I don’t expect too much movement until the Fed minutes," said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.
· Investors are awaiting the outcome of a two-day U.S. Federal Reserve policy meeting to be announced at 2 p.m. EDT (1800 GMT).
· In its June meeting the central bank had projected two more rate hikes in 2018 for a total of four.
· Last month, U.S. Fed Chairman Jerome Powell said the central bank should continue with a gradual pace of interest rate rises amid a strong economy to balance its employment and inflation goals.
· Gold is highly sensitive to rising interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar in which the metal is priced.
· "Gold, however, remains in a bit of a conundrum as political instability and escalating trade war triggers a buy signal, yet the steady U.S. dollar strength continues to nip those ideas in the bud," said Stephen Innes, APAC trading head at OANDA.
· Spot gold may retrace to a support at $1,248 per ounce, as it has failed to break a resistance at $1,258, Reuters technicals analyst Wang Tao said.
· Investors are also awaiting U.S. non-farm payrolls and unemployment data on Friday for further cues on monetary policy.
· Among other precious metals, silver was little changed at $16.03 an ounce.
Palladium rose 0.2 percent to $947.90 an ounce while platinum was trading 0.2 percent higher at $841.90 an ounce.
Reference: Reuters
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