Minutes of the Fed’s last policy meeting showed most members were ready to sanction the bank’s first rise in rates in nearly a decade in December as long as further moves then depended on the economy continuing to perform well.
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A retreat in the dollar, which had been rallying in the days leading up to the release of the minutes, helped increase the allure of the yellow metal. The dollar eased 0,1 percent against a basket of currencies, retreating from an earlier seven-month high. Thursdays advance marks the biggest gain for gold since October 28, according to FactSet data.
Higher rates tend to weigh on gold, as they lift the opportunity cost of holding non-yielding assets, while boosting the dollar.
There has not been an increase in the Fed’s interest rate since June 2006, before the beginning of the American financial crisis.
Gold prices revived on Thursday from their lowest in more than five years the previous session as the dollar fell back, releasing its stranglehold on commodities and making gold more affordable for buyers paying with other currencies.
“Gold is caught up in the narrative around Fed tightening, which the market has nearly completely priced in right now”, Jordan Eliseo, chief economist at trader Australian Bullion Co in Sydney, said by e-mail.
“It is possible that the gold market has largely factored in a rate rise”, HSBC said in a note. However, such trading means the upside is generally always going to be limited and Gold’s current price is $1,079, an increase of just 0.10%.
That said, Cieszynski warned that gold could see another significant leg lower before the dust settles. “Gold has been getting oversold so its due for a trading bounce in the near term, but I still think it could be drawn toward a retest of $1,000[an ounce] before its all over”.
Elsewhere on Comex, high-grade copper for December delivery finished less than a penny lower $2.0765 a pound.
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Silver tracked gold, dropping close to a 2-1/2-month low, down 0,5 percent at $14,07 an ounce, while platinum stood just above a seven-year low of $840,40 an ounce, hit earlier.
