Gold prices touch two-week high amid subdued US dollar

[BENGALURU] Gold prices rose to their highest in two weeks on Thursday amid a muted dollar, after minutes from the US Federal Reserve's September policy meeting revealed low inflation concerns.

Spot gold was up 0.2 per cent at US$1,294.29 an ounce by 0338 GMT, after earlier marking its best since Sept 27 at US$1295.45.

US gold futures for December delivery climbed 0.6 per cent to US$1,296.50 per ounce.

"Gold prices rose slightly as the market appeared to take the Fed minutes as slightly dovish. In particular, it was the comments on persistently low inflation that seemed to gain much attention. This saw the US dollar weaken slightly, increasing investor appetite for the precious metal," ANZ analysts said in a note.

Fed policymakers had a prolonged debate about the prospects of a pickup in inflation and slowing the path of future interest rate rises if it did not, according to the minutes of the US central bank's last policy meeting on Sept 19-20 released on Wednesday.

The dollar hit a fresh over two-week low on Thursday following the news.

Several policymakers said they would focus on upcoming inflation data over the next few months when deciding on the central bank's future rate hike path.

US short-term interest rate futures were steady on Wednesday as traders stuck to their bets on a possible US rate hike in December.

Gold is highly sensitive to rising interest rates, as these tend to boost the dollar, the currency in which the metal is priced.

"Investors' concerns over escalating tensions between US and North Korea remain high," ANZ analysts noted.

Mr Trump has "lit the wick of war" with North Korea and his country will be made to pay with "a hail of fire", a Russian news agency quoted North Korea's foreign minister as saying on Wednesday.

If people are not too worried about the Fed's policy, we have North Korea. Surely, geopolitical tensions are supporting prices ... we may try US$1,300 next week, said Yuichi Ikemizu, Tokyo branch manager at CIBC Standard Bank.

Spot gold may test resistance at US$1,299 per ounce, with a good chance of breaking above this level and rising more towards the next resistance at US$1,305, Reuters technicals analyst Wang Tao said.

Silver edged up 0.1 per cent to US$17.18 an ounce.

Platinum was 0.2 per cent higher at US$929.55 an ounce, having hit a two-week high in the previous session.

Palladium was unchanged at US$959.10 an ounce.

REUTERS