PRECIOUS-Gold steadies as dollar gains offset growth worries; U.S. data eyed

(Updates prices)
* Initial U.S. jobless claims data due at 1230 GMT
* SPDR gold holdings hit fresh seven-year high
* Dollar nears three-week peak

By Brijesh Patel
May 14 (Reuters) - Gold held steady on Thursday as concerns
over prolonged economic weakness due to the coronavirus outbreak
countered a stronger U.S. dollar after the Federal Reserve
dashed hopes of sub-zero interest rates.
Spot gold XAU= was little changed at $1,714.63 per ounce
at 1202 GMT. U.S. gold futures GCv1 rose 0.4% to $1,722.60 per
ounce.
"(Fed Chair) Jerome Powell painted a dire picture of the
economy in his speech yesterday. Unprecedented uncertainty,
higher risks should typically provide fuel to the gold market,
but it didn't," Julius Baer analyst Carsten Menke said.
"Maybe because he dismissed the option of negative interest
rates. The lack of willingness from the Fed to use these
instruments cooled the gold market," he added.
Powell vowed to use the central bank's power as needed, and
called for additional fiscal spending to help the virus-hit
economy. Negative interest rates, he said, are "not something
that we are considering". Gold, which pays no interest, tends to benefit when interest
rates fall as this reduces the opportunity cost of holding
bullion.
Powell's comments sent investors moving to the relative
safety of the greenback, with the dollar index .DXY rising to
a near three-week high, while U.S. stocks posted their biggest
two-day fall in more than three weeks. USD/ MKTS/GLOB
Markets' focus now shifts to weekly U.S. jobless claims data
due at 1230 GMT for more clarity about the economic outlook.
The pandemic, which has battered global growth, has prompted
central banks and governments around the world to roll out
massive monetary and fiscal support to limit economic damage.
Gold tends to benefit from widespread stimulus measures as
it is often seen as a hedge against inflation and currency
debasement.
Indicative of sentiment, SPDR Gold Trust GLD holdings, the
world's largest gold-backed exchange-traded fund (ETF), jumped
0.8% to a fresh seven-year high of 1,092.14 tonnes on Wednesday.
GOL/ETF
"While ETF investors with a longer-term view have continued
to accumulate gold, hedge funds have cut bullish bets to an
11-month low," Saxo Bank analyst Ole Hansen said.
"A sustained breakout could force these funds to get down
from the fence and back into the market. If realized, it could
be the driver behind the next move higher."
Among other precious metals, palladium XPD= fell 0.5% to
$1,808.16 an ounce, after having fallen 2.3% in the last
session.
Platinum XPT= rose 0.4% to $759.73 per ounce, while silver
XAG= shed 1% to $15.49.

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For an interactive graphic tracking the global spread, open link
in an external browser https://tmsnrt.rs/3aIRuz7
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