Gold pares losses on Fed minutes
New York (Jan 7) Gold prices have pared losses in electronic trading after minutes from the Federal Reserve's most recent meeting gave little reason to believe the central bank was considering raising interest rates ahead of schedule.
Gold for February delivery remained down for the day, trading at $US1,213.10 a troy ounce on the Comex division of the New York Mercantile Exchange after the contract ended the regular trading day down 0.7 per cent at $US1,210.70 a troy ounce.
In the minutes from its December meeting, the Fed gave few fresh clues on how it viewed the economy or the timing of future rate increases.
The lack of new hawkish commentary may have been a relief to some investors, who were wary of more optimism from the central bank.
"Nobody was looking for the Fed to say anything hawkish, and they certainly delivered," James Cordier, a principal at OptionSellers.com, said.
Gold prices edged lower in 2014, as investors became confident that the Fed would raise interest rates this year as the US recovery gains momentum.
Higher rates are viewed as detrimental to gold, which struggles to compete with yield-bearing investments when monetary policy tightens.
A strong dollar, as well as a bout of profit taking, weighed on gold prices in the regular session.
Investors also sold Treasurys and the Japanese yen, taking profits on a recent rally in safe haven assets that boosted gold. Some investors buy gold in turbulent times, believing that it will hold its value better than other assets.
With the drop in oil prices sparking concerns about global growth and a fresh wave of political uncertainty in the eurozone over Greek elections, investors still have reasons to buy gold, according to Peter Hug, global trading director at Kitco Metals.