Gold Extends Gains Following Fed Minutes
16 August 2017 - 9:12PM
Dow Jones News
By Stephanie Yang
Gold prices rose Wednesday after minutes from the Federal
Reserve's latest meeting indicated that officials were conflicted
on whether to raise interest rates in the coming months.
Gold for December delivery was recently up 0.7% at $1,288.00 a
troy ounce in electronic trading, extending gains after settling up
0.3% on the Comex division of the New York Mercantile Exchange.
On Wednesday, the Fed released minutes from the July meeting
that showed central bankers were split on the timing of a future
interest-rate increase, and noted lower-than-expected inflation
numbers. The uncertainty lent support to gold, which pays its
holders nothing and struggles to compete with yield-bearing assets
when borrowing costs rise.
"It doesn't seem that that they're ready to go like they were
two months ago," said Bob Haberkorn, senior market strategist at
RJO Futures.
The central bank previously had cited plans to raise interest
rates as many as three times this year, but the latest minutes
raised doubts, traders said.
"The Fed is now sending out a mixed signal on future rate
hikes," Mr. Haberkorn said. "We might not even have December on the
table at this point."
Meanwhile, the WSJ Dollar Index fell 0.4% to 86.33. A weaker
dollar boosts gold prices by making the dollar-denominated metal
cheaper for foreign buyers.
Base metals also rallied on Wednesday, as investors bet that
China's attempts to mitigate pollution by cutting capacity at
domestic smelters would take supply off the market and boost
prices.
Copper for September delivery settled up 2.4% to $2.9535 a pound
in New York, closing at a the highest level since November
2014.
Other industrial metals also surged to multiyear highs. The
London Metal Exchange's three-month zinc contract soared to its
highest level in 10 years on Wednesday, while the LME's aluminum
contract rose to two-year highs.
Tai Wong, head of metals trading at BMO Capital Markets, said
much of the recent run has been driven by Chinese speculators
jumping into the market. Improving Chinese economic data and
expectations for industrial demand also have helped metals like
copper this year, analyst said.
"As long as the speculative fervor for these metals in China
remains, they look like they will continue to go higher," Mr. Wong
said.
Write to Stephanie Yang at stephanie.yang@wsj.com
(END) Dow Jones Newswires
August 16, 2017 15:57 ET (19:57 GMT)
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