Gold steadies amid limited dollar follow-through from hawkish Fed minutes

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Gold futures steadied in Thursday trading near the multimonth highs hit earlier this week, with moves in dollar trading subdued and cautious stock action propping up the precious metal.

Gold settled lower on Wednesday and extended its decline in after-hours electronic trading as a benchmark U.S. dollar index climbed to fresh session highs shortly after the release of hawkish minutes from the Federal Reserve’s September monetary policy meeting. A pair of economic reports on the Philadelphia-area economy and jobless benefits claims Thursday morning did little to sway financial market thinking away from the reaction to the Fed release a day earlier.

Early Thursday, December gold














GCZ8, -0.07%












 was little changed at $1,227.40 an ounce compared to Wednesday’s close. The contract finished Tuesday at $1,231, the highest since July 31 for a most-active contract, according to FactSet data. Gold is up nearly 3% so far for October, trimming its year-to-date drop to close to just over 6%.

The ICE U.S. Dollar Index














DXY, +0.05%












 was little budged at 95.62 early Thursday. The dollar index has strengthened 3.7% year to date in the wake of monetary policy tightening at the Federal Reserve.

Meeting minutes revealed that a majority of senior Fed officials believe that interest rates will have to continue to rise until policy becomes restrictive, which could provide some resistance to gold bulls because rising rates are likely to juice the dollar and make risk-free government bonds a more attractive investment when compared against bullion.

Some analysts aren’t convinced. “While they seem on course for a December hike and perhaps three next year, I believe the Fed and investors at large will soon realize that there’s little room for rate hikes beyond that,” said Brien Lundin, editor of Gold Newsletter. “Rising rates and a burgeoning federal debt are a toxic mix that will result in debt service costs that would swamp the federal budget. As this reality becomes more widely accepted, I believe gold prices will benefit greatly.”

Stocks and gold have been volatile amid mounting concerns over rising Treasury rates














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A rapid climb in rates also has coincided with weakness in the U.S. dollar and gold tends to gain when the dollar is weaker because the assets become comparatively more attractive to buyers using other monetary units.

December silver














SIZ8, -0.43%












came under greater pressure, last off 8 cents, or 0.6%, at $14.58 an ounce.

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Source : MTV