Gold steadied near a one-week high on Thursday, buoyed by a slight retreat in the dollar, as investors awaited a policy decision by the European Central Bank.
Spot gold was little changed at $1,946.22 per ounce by 0920 GMT, after hitting its highest since Sept. 3 at $1,950.51 on Wednesday.
U.S. gold futures were also steady at $1,954.80.
The dollar index slipped from four-week highs, making gold less expensive for holders of other currencies.
“We’re waiting for the ECB decision and markets are in a holding pattern,” said Michael Hewson, chief market analyst at CMC Markets UK.
“We might see some strength in gold if the central bank follows the path of the U.S. Federal Reserve and decides to tolerate a higher inflation rate.”
While the ECB is all but certain to keep policy unchanged, it could signal more stimulus at a later stage given a cloudy economic picture and a strong euro.
Late in August, the U.S. Fed said it would adopt an average inflation target, meaning interest rates are likely to stay low even if inflation rises a bit in the future.
Global central banks have introduced unparalleled stimulus and kept interest near zero, pushing gold to new highs, highlighting its role as a buffer against inflation and currency debasement.
“Gold has maintained the 50-day moving average quite well and unless it falls below the August low ($1,863.67), it will remain supported,” CMC’s Hewson said.
Reuters technical analyst Wang Tao said gold may rise further to $1,965 per ounce.
“Ample money supply, lower interest rates and macro uncertainty should support gold investment,” ANZ analysts said in a note. “Physical demand is recovering, so we see the gold price reaching $2,300/oz next year.”
Elsewhere, silver fell 0.1% to $26.99per ounce, platinum gained 0.4% to $919.99 and palladium rose 0.9% to $2,292.91.