Gold Gains on Divided Fed

By Marina Force Features Dow Jones Newswires

Gold prices rose Thursday after minutes from the U.S. Federal Reserve's July meeting showed disagreement over the timing of further interest-rate increases.

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The precious metal was up 0.25% to $1,286.40 a troy ounce in midmorning trade.

Copper prices moved lower, down 0.37% to $6,503 a ton, as traders took profits after the recent rally, which was driven by "heavy speculative buying," ING said in a morning note.

Investors' appetite for gold returned after the Fed minutes damped rate increase prospects and darkened the dollar outlook, said Eugen Weinberg, Head of Commodity Research at Commerzbank AG.

In addition to revealing a split on the timing of a future rate increase, the minutes noted lower-than-expected inflation numbers. The prospect of a longer period without a rate increase is supportive of gold, as higher rates boost the dollar and make gold less competitive against yield-bearing assets like Treasurys.

President Trump's decision Wednesday to dismantle two key business advisory councils also weighed on the dollar outlook, Mr. Weinberg said.

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The existence of these advisory teams had given rise to the hope that the U.S. would pursue pro-business politics. "This hope has faded somewhat," Commerzbank said in a morning note.

"We might see a setback [in gold prices] in the short term because the rise was very strongly speculative, with investors pouring into the metal because of a weaker dollar and lower interest rates expectations," Mr. Weinberg warned.

Looking ahead, dollar observers were awaiting the Federal Reserve's Jackson Hole conference next week for potential policy announcements.

Among base metals, zinc fell 0.71% to $3,098 a metric ton, aluminum fell 0.62% to $2,078 a metric ton, tin rose 0.75% to $20,225 a metric ton, nickel rose 0.42% to $10,760 a metric ton, and lead fell 0.66% to $2,496.50 a metric ton.

Among precious metals, palladium rose 0.35% to $920 a troy ounce, platinum fell 0.61% to $975.50 a troy ounce, and silver fell 0.23% to $17.08 a troy ounce.

Write to Marina Force at marina.force@dowjones.com

(END) Dow Jones Newswires

August 17, 2017 06:32 ET (10:32 GMT)