Gold prices find some traction as Fed minutes pack few surprises

London (Oct 13)  Gold futures prices advanced Thursday, so far building on the modest after-hours gain notched Wednesday when largely as-expected policy meeting minutes from the Federal Reserve did little to sway expectations for slow, data-driven rate hikes at the central bank.

December gold GCZ6, +0.58%  rose $6.80, or 0.5%, to $1,260.60 an ounce. It traded up at $1,257 an ounce in late-Wednesday’s electronic-trading session, reacting to the Federal Open Market Committee minutes.

Gold had finished the regular trading session lower and is on track to end the week relatively little changed, confined in narrow trading bands after last week’s plunge was the largest in more than three years.

As for the Fed, several voting members of the policy committee said a rate hike would be needed “relatively soon,” according to the minutes. But the committee decided to wait for “further evidence” of continued progress toward full employment and a faster pace of inflation.

“Even though several members said it was a ‘close call’ to hike in September, many noted there were few signs of emerging inflationary pressures. The reaction in [the U.S. dollar] remained relatively limited on the news, probably because policy makers had already communicated most of these points ahead of the minutes,” said Charalambos Pissouros, senior analyst at IronFX Global, in a note.

“The overall message we got is the Fed decided to be patient in September but is very likely to act in the upcoming months if the economy continues to post decent results,” he added.

The next Fed meeting is scheduled for Nov. 1-2, but expectations for a rate hike at that meeting are slim. Markets have priced in more than a 60% chance for a rate increase at the December meeting, according to Fed funds futures trading.

Higher interest rates can boost the dollar and dull demand for dollar-denominated commodities including gold and silver, but the ICE U.S. Dollar Index DXY, -0.27% which measures the dollar against a half-dozen rivals, slipped 0.1% early Thursday. The dollar fell against the yen as China trade data spooked investors but did continue its advance against the pound.

Meanwhile, December silver SIZ6, +0.54%  traded up 10 cents, or 0.6%, at $17.61 an ounce. December copper HGZ6, -0.71% dropped 2 cents, or 0.8%, at $2.16 a pound.

Among the exchange-traded funds, the SPDR Gold Trust GLD, +0.16%  rose 0.3% premarket and the iShares Silver Trust SLV, +0.54%  edged up by 0.1%, while the VanEck Vectors Gold Miners ETF GDX, +2.17%   climbed by 0.7%.

Source: MarketWatch