Gold firms on softer dollar with focus on US Fed minutes

GOLD prices rose on Tuesday, supported by a weaker US dollar as investors look forward to minutes from Federal Reserve’s latest meeting for more guidance on its interest rate outlook.

Spot gold was up 0.3 per cent at US$1,983.81 per ounce, as of 0041 GMT. US gold futures also gained 0.3 per cent to US$1,985.70.

The dollar languished near more than a 2-1/2-month low against its rivals, as investors expect US interest rates to fall next year and see that as a signal to sell the greenback in anticipation.

A weaker dollar makes gold less expensive for other currency holders.

Minutes from the Fed’s latest meeting are due at 1900 GMT on Tuesday.

Signs of slowing inflation in the United States and weaker-than-expected jobless claims data last week boosted expectations that the US central bank was done raising interest rates.

Markets are widely expecting the Fed to leave rates unchanged in the December meeting and currently pricing in a greater than 50 per cent chance of a rate cut of at least 25 basis points by May, according to CME’s FedWatch Tool.

Lower US interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion.

Benchmark US 10-year Treasury yields were hovering near two-month lows touched last week.

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Gold subdued as US yields firm, dovish Fed hopes lend support

Inflation is likely to remain “stubborn” and force the Federal Reserve to keep interest rates elevated for longer than investors anticipate, Richmond Fed president Thomas Barkin said.

One US recession gauge - the Conference Board’s October leading economic indicator - showed on Monday a decline of 0.8 per cent, its 19th straight monthly fall.

Spot silver rose 0.5 per cent to US$23.52 per ounce, while platinum was up 0.1 per cent at US$919.40. Palladium was flat at US$1,077.14 per ounce. REUTERS