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Gold gains on dollar retreat ahead of Fed minutes

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Gold prices inched higher on Wednesday as

the U.S. dollar pulled back, with investors awaiting minutes

from the Federal Reserve’s last policy meeting that could offer

clues on further interest rate hikes.

Spot gold rose 0.2% to $1,778.53 per ounce, as of

0511 GMT, after hitting its lowest since Aug. 8 at $1,770.86 on

Tuesday.

U.S. gold futures gained 0.2% to $1,793.20.

The dollar slipped 0.1% against its rivals, making

gold less expensive for other currency holders.

“Focus is on minutes from the July Federal Open Market

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Committee meeting and the Jackson Hole Symposium on Aug. 25-27.

Both these events will set the stage for Fed meeting in

September,” said Ilya Spivak, a currency strategist at DailyFX.

“If we are going to get a more hawkish view from the Fed on

rate hikes, that’s going to be somewhat negative for gold in

terms of its core appeal for investors.”

The minutes of the Fed’s July 26-27 policy meeting are due

at 1800 GMT.

The U.S. central bank has raised its benchmark overnight

interest rate by 225 basis points in total since March to tame

high inflation.

Traders were pricing in around a 42.5% chance of a

75-basis-point rate hike and a 57.5% chance of a 50-bp increase

at the Fed’s next meeting on Sept. 20-21.

Although gold is seen as a hedge against inflation, rising

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U.S. interest rates dull non-yielding bullion’s appeal.

Despite signs of easing inflation in the world’s largest

economy, Fed officials have maintained a hawkish tone on future

rate hikes that has led to a pullback in gold prices from the

key $1,800 level.

Holdings of SPDR Gold Trust , the world’s largest

gold-backed exchange-traded fund, fell 0.18% to 992.20 tonnes on

Tuesday, its lowest since January.

Elsewhere, spot silver rose 0.3% to $20.17 per ounce,

platinum gained 0.2% to $936.55, and palladium

climbed 0.3% to $2,159.82.

(Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi

Aich and Subhranshu Sahu)

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