FOMC minutes neutral for gold, price edges higher

Gold edged higher on the morning of Thursday, October 13, in London, while largely continuing to consolidate after last week’s sell-off.

The spot gold price was recently quoted at $1,258.05/1,258.35 per oz, up $2.90 on Wednesday’s close. Trade has ranged from $1,253.15 to $1,261.90 so far.

The dollar index was recently at 98.07, steeping back from a seven-month high of 97.85 earlier today after the Federal Open Market Committee’s (FOMC) September meeting minutes provided more evidence that the US central bank’s policy board will raise rates before the end of the year.

“It was a pretty close decision to keep rates on hold, making it increasingly likely that we will see a rate hike in December,” Angus Nicholson, a market analyst at IG, said.

On Wednesday, the Fed Fund futures indicated a 70% chance of a 25-basis-point rise in December, according to the CME FedWatch Group tool.

“The bullion market will have to cope with higher rates, but this may be largely absorbed by the market already,” HSBC analyst  James Steel said. “Also, few hikes may moderate the downside risk. Certainly, gold has been under pressure but we do not think the FOMC minute will add materially to the downwards slant of the market,” Steel added.

In the other precious metals, the spot silver price was recently quoted at $17.545/17.565 per oz, up five cents. Platinum at $937/943 was unchanged while palladium edged $2 lower to $639/647.

(Additional reporting by Vivian Teo, editing by Mark Shaw)

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