The index last stood at 94.514, having lost 1.1 percent so far this week, as markets trimmed chances of rate rises this year amid subdued inflationary pressures.
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Comments from Fed policymakers in recent days that suggest a bias toward raising benchmark U.S. interest rates have pushed investors to re-examine minutes from the USA central bank’s most recent meeting in July, analysts said. Members of the Fed’s rate-setting Federal Open Market Committee were generally upbeat about the USA economy and labor market, but several said any slowdown in future hiring would augur against a near-term hike.
“Even though the minutes came out on Wednesday afternoon, I suspect that participants are still digesting their contents and updating their expectations”.
The minutes disappointed those who had bet that the Fed could be more hawkish, after New York Fed chief William Dudley said on Tuesday that the Fed could possibly raise USA rates as soon as next month. San Francisco Fed chief John Williams called on Thursday for the bank to return to monetary tightening “sooner rather than later”.
The San Francisco Fed president isn’t a voting member of the Fed policy committee but is seen as an influential figure due to his close ties with Fed Chairwoman Janet Yellen.
“There’s an unease about next week and Yellen’s speech”, said Bob Haberkorn, senior market strategist at RJO Futures, adding that investors are looking for clarity after receiving mixed messages from Fed officials this week.
While the Fed’s hesitation in lifting rates this year has helped boost gold by 27%, recent comments have raised the possibility of a move before year-end.
Wall Street greeted the news with an effective shrug, with the Dow Jones Industrial Average up less than 0.1% at 18,567.46, the S&P 500 in similar territory at 2,180.98 and the Nasdaq down less than 0.1% at 5,225.73 at about 1930 GMT. All major sectors in Europe were in the red.
Holdings in exchange-traded products backed by bullion slipped 0.1% to 2,027.6 metric tons, according to data compiled by Bloomberg as of Thursday.
The US currency gained 0.3 per cent to 100.21 yen.
Minutes of the Fed’s last meeting in late July show an nearly even split between supporters of another rate hike in the near-term and others who would wait for more confidence that inflation was stirring. The common currency is headed for a gain of 1.6% this week.
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“We have had some good jobs reports here, but on the other hand GDP growth is only 1.2 percent year over year, inflation is still below target, inflation expectations are low”, Bullard added.
