Gold prices hold steady ahead of Fed minutes

Last Updated: Wed, Oct 11, 2017 17:47 hrs

Gold prices were stable on Wednesday as the U.S. dollar held steady, with investors waiting for minutes from the U.S. Federal Reserve's latest meeting for clues on the outlook for potential rate rises.

Spot gold was unchanged at $1,287.36 an ounce by 0709 GMT.

U.S. gold futures for December delivery eased 0.3 percent to $1,290.50 per ounce.

"Gold rose initially following on from its overnight rally, but this faded to leave it almost unchanged as early Asia buying petered out," said Jeffrey Halley, senior market analyst at OANDA.

"Even news that the U.S. had flown two B-1 aircraft over the Korean Peninsula failed to raise the market from its lethargy despite the dollar weakening slightly this morning."

The U.S. military flew two strategic bombers over the Korean peninsula in a show of force late on Tuesday, as President Donald Trump met top defence officials to discuss how to respond to any threat from North Korea.

"With North Korea relatively quiet and the Catalans choosing not to escalate the constitutional quagmire in Spain, gold gave up some of its safe-haven premium as we approached midday," Halley said.

The dollar wavered on Wednesday, ahead of the release of the minutes from the Fed's September policy meeting later in the day, while the euro held firm as political tensions over Catalonia receded slightly. [USD/]

"It just feels a little bit heavier (for gold) with what's going on with the dollar in Asia," a Hong Kong-based trader said.

"It's probably going to be in the $1,280-1,300 range for the moment."

Markets are widely expecting the U.S. central bank to raise rates in December, for a third time this year.

Gold is highly sensitive to rising interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar in which the metal is priced.

Spot gold may retrace to support at $1,281 per ounce before resuming its rally towards resistance at $1,299, said Reuters technical analyst Wang Tao.

In other precious metals, silver rose 0.2 percent to $17.10 an ounce, having hit a three-week high in the previous session.

Platinum was up 0.2 percent at $930.50 an ounce and palladium was trading 0.3-percent higher at $936.25 an ounce.

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