Gold rose 0.5 per cent on Thursday on improving technical charts and after a researcher from China's ruling party called on the world's sixth biggest sovereign gold holder to buy more bullion to hedge against the US dollar.
But advances were limited as the greenback held most of its gains made after the Federal Reserve signalled on Wednesday it would not change its policy steps to support the economy.
Spot gold stood at $US935.00 per ounce in afternoon trade, up 0.4 per cent from the notional close in New York of $US931.10.
US gold futures for August delivery rose 0.1 per cent to $US935.70 an ounce from the previous settlement. On Tuesday, the contract rose $10.10, or 1.1 percent, on the COMEX division of the New York Mercantile Exchange.
Bullion earlier rose as high as $US936.30 after the head of the economic department of the Communist Party policy research office in China said at a Beijing forum that the country should buy more gold, and that purchasing land in the United States was a better option for China than buying US Treasuries.
"News that Russia and China are reviewing their dollar-based assets has been circulating in the markets in the past six months," said Shuji Sugata, a manager in Mitsubishi Corp Futures and Securities' research team.
"The comments from the Chinese researcher are within what has been said. But the fact that their stance in favour of gold has not been changed is a plus for gold and that's why it's being supported," he said.
But gold was still off Wednesday's high of $US942.20, when currency movements boosted bullion's dollar-hedge appeal after an unexpected jump in US durable goods orders in May.
Later in the day, the Fed, concluding a two-day meeting, said it would hold overnight rates in a range between zero to 0.25 per cent and gave no hint of an imminent exit from its easing monetary policy.
Investors mostly took in stride the Fed's comments about low inflation risk, while at the same time remaining cautious on the US economy, traders said.
"The Fed is checking a market bias toward either inflation or deflation. So, it's got to provide little incentive to trade after gold had a bumpy ride the day before," said Naomi Suzuki, a senior analyst at SC Asset Management Co.
There are some bullish signs on technical charts as gold stopped falling at $US912.90 per ounce this week, traders and analysts said.
"Despite a strong dollar capping the topside, people are more confident as a technical support of $US915 has been confirmed," Mitsubishi's Sugata said.
Bullion has come under pressure mainly due to a strong dollar in the past few weeks. In early June, the precious metal hit a three-month high of $US989.80.
Underlining a lack of aggressive buying, holdings by the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, remained unchanged at 1131.24 tonnes on Wednesday, unchanged since Monday.
Reuters
