(Reuters) - Gold held steady on Thursday, supported by a softer dollar due to concerns the prolonged U.S. government shutdown will limit economic growth even as concerns of slowing global growth grew.
Spot gold was mostly steady at $1,282 per ounce, as of 0549 GMT, while U.S. gold futures were down 0.2 percent at $1,281 per ounce.
A weaker dollar is supporting gold for the moment, said Michael McCarthy, chief market strategist at CMC Markets.
However, McCarthy cautioned that bullion price gains are capped by limited investor buying on indications from price charts used by technical traders.
“The issue for gold is there is a very heavy resistance seen around $1,290 and $1,310. A further weakening of the U.S. dollar could be supportive. But, we need something to really push gold through the resistance level,” he said.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, fell for third day. However, Asian shares rose on Thursday after Wall Street managed to end higher.
On Wednesday, U.S. President Donald Trump said that the United States was doing well in trade talks with China, saying at a White House event that China “very much wants to make a deal.”
However, a prolonged U.S. government shutdown reminded investors of risks to growth to the economy.
White House economic adviser Kevin Hassett said in a CNN interview the U.S. economy could see zero growth in the first three months if the partial government shutdown lasts for the whole quarter.
Meanwhile, investor focus turned to the European Central Bank (ECB), which is widely expected to keep its monetary policy unchanged at its first policy meeting of 2019 that ends later on Thursday.
Market watchers also expect ECB to acknowledge growing threats to the euro zone economy.
“Should (ECB President Mario) Draghi take a more dovish tone we may see the euro under pressure, creating a firmer greenback and weighing upon metals prices,” MKS PAMP Group said in a note.
“The political stalemate in Washington and U.S.-China trade relations remain in focus and should provide support to (gold) prices over the near-term.”
Technically, spot gold may retest a support at $1,278 per ounce, a break below which could cause a loss to the next support at $1,266, according to Reuters analyst Wang Tao.
Among other metals, palladium, which hit a record high of $1,434.50 an ounce last week on low inventories and rising demand, fell 0.2 percent to $1,345 an ounce.
Silver was down 0.2 percent $15.32 an ounce, while platinum fell 0.3 percent to $792.
Reporting by Nallur Sethuraman in Bengaluru; Editing by Sherry Jacob-Phillips, Christian Schmollinger and Rashmi Aich