Gold futures ended slightly higher on Thursday as softness in the U.S. dollar and a slight pullback in bond yields helped to nudge the precious metal slightly higher.
April gold GCJ8, -0.17% rose 60 cents, or less than 0.1%, to $1,332.70 an ounce, and March silver SIH8, -0.58% lost 3 cents, or 0.2%, to $16.587 an ounce. The silver-focused exchange-traded iShares Silver Trust SLV, -0.45% rose 0.7%, while the gold ETF, the SPDR Gold Shares GLD, -0.13% added 0.4% late Thursday in New York.
On Wednesday, yields and the dollar kicked higher after the minutes of the Federal Reserve's January meeting heightened expectations for a quickened pace of rate increases, putting pressure on dollar-pegged commodities.
Gold settled higher Wednesday in the wake of the Fed minutes, which suggested central bankers expect inflation to tick higher but remain sanguine about the outlook for world's largest economy. Higher inflation can be supportive for gold because the metal is often viewed as a hedge against rising prices.
The U.S. central bank also suggested an "increased likelihood" of further interest rate increases, heightening prospects of a rate rise in March and four rate increases in 2018 as the economy strengthening has increased.
On Thursday, the dollar, gauged by the ICE U.S. Dollar Index DXY, +0.19% was down 0.3% at 89.74, while the benchmark 10-year Treasury note yield TMUBMUSD10Y, +0.00% traded at 2.92%, after reaching a fresh four-year peak above 2.95% late Wednesday.
A stronger dollar can weigh on dollar-denominated commodities because it makes them more expensive to buy for holders of other currencies.
That view of more interest-rate hikes helped push the U.S. 10-year Treasury note yield up closer to the 3% mark. Rising bond yields can sap the attractiveness of investing in gold as it offers no yield.
"Commodities remain under pressure with gold trading around the $1,325 area, succumbing to the rise in dollar's price but the downtrend is showing signs of exhaustion, so technical traders will start looking for a bottom in the yellow metal's decline," said Konstantinos Anthis, head of research at ADS Securities, in a note.
David Madden, market analyst at CMC Markets U.K.uggested that minutes from the European Central Bank released earlier Thursday also may have offered a modest bump to gold.
"Gold fell to its lowest level in over one week this morning, but has since bounced back as the weakness in the US dollar triggered short covering and bargain hunting. The negative move in gold overnight was a reaction to the US Fed minutes, and the subsequent turnaround was driven by the ECB minutes," Madden said.
According to an account of the ECB's most recent gathering, the central bank sees inflation picking up but not enough to warrant tightening eurozone borrowing costs.
Earlier Thursday, Randall Quarles, the Fed's vice chairman for supervision, in Tokyo said recent low inflation readings aren't "a great concern," and the economy is "performing very well."
In other metals, March copper HGH8, -1.06% added 2.55 cents, or 0.8%, to settle at $3.2415 a pound.
April platinum PLJ8, -0.13% meanwhile, picked up $2.80, or 0.3%, to end at $999.40 an ounce. March palladium PAH8, +0.69% rose $11, or 1.1%, to settle at $1,033.50 an ounce.