By Eileen Soreng
(Reuters) - Gold prices held steady around a one-week low on Thursday, weighed down by minutes from the last U. S. Federal Reserve meeting that showed policymakers backed further interest rate rises.
Spot gold was almost unchanged at $1,323.95 an ounce at 0353 GMT, a day after it fell to its lowest in a week at 1,322.20.
The precious metal has fallen 1.7 percent so far this week.
U. S. gold futures were down 0.5 percent at $1,325.8 per ounce.
The dollar index, which measures the greenback against a basket of currencies, was up 0.1 percent at 90.106.
The greenback, which has risen over a percent so far this week, traded near a one-week high as minutes of the Federal Reserve's January meeting showed policymakers were more confident of the need to keep raising interest rates.
"The high interest rate environment would be key driver that would drive gold prices lower," said OCBC analyst Barnabas Gan.
"Since gold remains a zero yielding asset, higher interest rate environment could stimulate risk appetite and yield-chasing behaviour," said Gan, whose year-end outlook for gold is at $1,100.
The Fed's rate-setting committee showed more confidence in the need to keep raising interest rates, with most believing that inflation would perk up.
That led investors to narrow the odds on faster hikes with a host of Fed fund futures hitting contract lows. Three rate rises are now almost fully priced in for this year, compared to two as recently as December.
However, some analysts said concerns about rising inflation may be tempered by caution due to the recent market volatility.
"The minutes were more balanced in my view as the recent uptick in volatility will have as much bearing on Fed policy decisions as the subtle rise in inflation," said Stephen Innes, APAC trading head for OANDA.
Spot gold is expected to test a support at $1,316 per ounce, a break below which could cause a loss to the next support at $1,303, according to Reuters technical analyst, Wang Tao.
"The key level of $1,360 an ounce is likely to keep prices capped and act as a supply zone," said Sugandha Sachdeva, vice president of metals, energy and currency research at Religare Securities Ltd.
"As long as this is not taken out convincingly, gold prices may consolidate in near term, with major support in sight at $1,309 an ounce."
Among other precious metals, silver fell 0.4 percent to $16.43 an ounce, while palladium was down 0.1 percent at $1,019.25 per ounce and platinum was up 0.2 percent at $989.40 after touching a more than one-week low of $983.
(Reporting by Eileen Soreng in Bengaluru, Editing by Joseph Radford and Richard Pullin)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)
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