By Eric Onstad
LONDON (Reuters) - Gold drifted lower on Thursday despite a weaker dollar as investors worried that U.S. Federal Reserve minutes would highlight the prospect of further rate hikes.
Spot gold was down 0.2 percent at $1,253.75 an ounce by 1215 GMT. The metal touched a one-week high of $1,261.10 in the prior session and had gained over $20 from Tuesday's low of $1,237.32, its weakest since Dec. 12.
U.S. gold futures for August delivery were up 0.2 percent at $1,255.90 an ounce.
The dollar index fell to its lowest level in more than a week while the euro climbed half a percent to near three-week highs following strong German data.
"Gold is not making huge headway even though we're in a slightly weaker dollar environment. The market is very much in a wait-and-see mode ahead of the Fed minutes," said Jonathan Butler, commodities analyst at Mitsubishi in London.
Also Read
The minutes of the U.S. central bank's June meeting are scheduled to be published at 2 p.m. EDT (1800 GMT). During the discussion, the Fed had projected two more rate hikes in 2018 for a total of four.
The minutes may point to concerns about inflation or that members want monetary policy to keep pace with fairly strong economic growth, Butler said.
"Those sorts of sentiments when they come out could weigh on gold and could give the dollar somewhat of a boost."
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.
Investors are also awaiting the non-farm payrolls and unemployment data on Friday.
"One would not like to have any bullish bets on gold when the labour market trend is strong," ThinkMarkets chief market analyst Naeem Aslam said.
Spot gold may retrace to support at $1,248 per ounce as it has failed to break resistance at $1,258, Reuters technicals analyst Wang Tao said.
Physical gold demand has been lacklustre in India, the second-biggest gold consumer after China, Commerzbank said.
"Since Chinese traders are also buying only small amounts of gold at present, the gold price is finding no support from this side, either," it said in a note.
Among other precious metals, silver shed 0.1 percent to $16.04 an ounce.
Palladium rose 0.1 percent to $946.80 an ounce, while platinum added 0.3 percent at $842.10 an ounce.
(Additional reporting by Karen Rodrigues in Bengaluru; Editing by Dale Hudson/David Evans)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)