(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 was little changed at $1,715.17 per ounce at 1054 GMT. U.S. gold futures rose 0.5% to $1,724.10 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 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 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 was steady at $1,818.47 an ounce, after having fallen 2.3% in the last session.

Platinum rose 0.5% to $760.48 per ounce, while silver shed 0.8% to $15.52.