July 5, 2017 / 7:55 PM / 5 months ago

PRECIOUS-Gold steadies after Fed minutes show split inflation view

    * Fed minutes show split on U.S. inflation outlook
    * Dollar pares gains after Fed minutes released
    * N.Korean missile launch prompts short-lived rally
    * Silver at 6-month lows, platinum at 8-week low

 (Updates prices; adds comment, second byline, NEW YORK
    By Marcy Nicholson and Peter Hobson
    NEW YORK/LONDON, July 5 (Reuters) - Gold steadied on
Wednesday, after Federal Reserve minutes showed a growing split
among policymakers on the inflation outlook and the dollar pared
gains, lifting the precious metal above an eight-week low
reached earlier in the session. 
    The minutes showed the central bank was split on how
inflation might affect the future pace of interest rate
    "We changed our call for the next Fed hike by moving it to
December (from September) and the June Fed minutes seem to
confirm that the September meeting will instead be used to
announce the start of the run-off of the central bank's balance
sheet," said Avery Shenfeld, chief economist for CIBC Capital
Markets, in a note.
    Spot gold        was down 0.02 percent at $1,223.37 an ounce
by 3:08 p.m. EDT (1908 GMT), after touching $1,217.14, the
lowest since May 10. 
    A missile launch by North Korea prompted only a brief rally
for gold, seen as a safe haven in times of uncertainty.
    U.S. gold futures         for August delivery settled at
$1,221.70, up 0.2 percent from Monday's settlement following a
U.S. holiday on Tuesday. 
    The dollar index        was little changed after rising 0.3
percent. A stronger greenback makes gold more expensive for
holders of other currencies, and higher bond yields raise the
opportunity cost of holding non-yielding bullion. 
    "We've seen the dollar rebound from recent lows and treasury
yields moving higher. That is a very powerful driver of the gold
market," Julius Baer analyst Carsten Menke said. 
    Though yields eased later on Wednesday, they have risen
sharply in recent weeks as several central banks signaled that
they would tighten monetary policy, while Fed officials appeared
undeterred by weak economic data and low inflation. 
    That has caused gold prices to tumble more than 3 percent
from a high of $1,258.81 on June 23. 
    Investors were also looking ahead to U.S. employment data on
Friday that could influence the pace of rate rises.         
    In other precious metals, silver        fell as low as
$15.84, the weakest since December.
    Platinum        dropped to a low of $896.25 per ounce, the
lowest since May 9. 
    Strong technical support from Fibonacci retracement and
previous lows was between $902.39 and $890.49, analysts at
JPMorgan said in a note. "(This) could potentially provide a
base for a broader recovery if not a new up-trend," they said. 
    Palladium        was down 1.3 percent at $840.70 an ounce.

 (Additional reporting by Nithin Prasad and Vijaykumar Vedala in
Bengaluru. Editing by Jane Merriman and Elaine Hardcastle)

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