(Kitco News) - Gold futures were largely steady Thursday, trading in their narrowest range since Sept. 17, with traders and analysts citing a number of factors both helping and hurting the metal.

Shortly before 1:30 p.m. EDT, Comex December gold was down $1.30, or 0.1%, to $1,123.30 an ounce. The contract meandered in an $11.50 band between $1,117 and $1,128.50 an ounce. September silver had a stronger day, adding 37.9 cents, or 2.7%, to $14.42 an ounce.

“The gold market seems to be stabilizing around these levels,” said James Steel, analyst with HSBC.

Gold came into the New York trading day with a weaker tone, with several observers at the time blaming it mostly on stronger stock markets around the globe. Shanghai stocks, which led the recent sharp correction lower, bounced back by 5.3%. The Dow Jones Industrial Average was up by around 357 points, or 2.2%.

Additionally, gold was held back by a stronger U.S. dollar against the euro, Steel said. The single European currency was down to $1.12348, from $1.13132 late Wednesday.

“That is probably the primary drag on the gold market right now,” Steel said.

However, he said, the “quite substantial” rally in crude oil is providing some indirect support to gold. October crude oil on the New York Mercantile Exchange was $3.22, or 8.2%, higher at $41.82 a barrel.

Further, Steel added that some modest physical demand appears to be emerging. “The market has held well above $1,100 and there are expectations that any declines might boost some emerging-market buying,” Steel said.

Gold also has drawn some support from ideas that recent financial-market volatility and slower economic growth in other nations like China may keep the Federal Reserve from hiking interest rates in the foreseeable future, said Daniel Pavilonis, senior market strategist with RJO Futures. Most observers now see a small chance of a rate hike at the September Fed meeting, after the Federal fund futures had factored in more than a 50% probability earlier this month.

“Even though we had good GDP, traders are looking at the possibility of the Fed not raising rates,” Pavilonis said.

The government Thursday revised upward its estimate of growth in gross domestic product during the second quarter to 3.7% from the originally reported 2.3%. However, on Wednesday, New York Fed President William Dudley, seen as one of the more influential members of the Federal Open Market Committee, said the case for a rate hike next month was “less compelling to me than it was a few weeks ago.”

Still, Pavilonis pointed out, U.S. Treasury yields rose the last couple of days. The 10-year yield was steady for the day but had been as high as 2.207% after a roughly four-month low of 1.997% on Monday.

“People want to see the results from Jackson Hole,” Pavilonis added, in reference to a Federal Reserve symposium in Wyoming that began Thursday.  Often, policymakers have signaled actions at this event, he said. Thus, there is a somewhat neutral market tone while traders await any breaking news, he continued.

By Allen Sykora of Kitco News; asykora@kitco.com

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