Gold price advances, U.S Fed minutes in focus

New York (Nov 21) Gold rebounded on Tuesday as investors anticipated signals on the direction of U.S. monetary policy from the minutes of a November Federal Reserve meeting. Spot gold was up 0.2 percent at $1,279.62 per ounce, as of 1105 GMT. The metal fell about 1.4 percent on Monday in its biggest one-day percentage drop since Sept. 11. U.S. gold futuresfor December delivery gained 0.3percent to $1,279.30. "The Fed rate hike in December is roughly priced in and unless there are very hawkish minutes, its more that people are looking for direction about future moves," said Georgette Boelle, a commodity strategist at ABN AMRO. The minutes are due on Wednesday. A December interest rate increase was already widely expected, analysts said. Gold was also profiting from a political crisis in Germany, Europe's largest economy, boosting bullion's safe-haven appeal. German Chancellor Angela Merkel said she would prefer a new election to leading a minority government after talks on forming a three-way coalition failed. The dollar index, which measures the greenback against a basket of its peers, was steady at 94.07 while world stocks inched slightly higher. Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion. Fed Chair Janet Yellen said on Monday she would resign her seat on the Fed's Board of Governors once Jerome Powell is confirmed and sworn in to replace her as head of the U.S. central bank. Traders were also keeping an eye on safe-haven demand for gold after U.S. President Donald Trump put North Korea back on a list of state sponsors of terrorism on Monday. BMI Research lowered its gold price forecast slightly to $1,300 per ounce in 2018 and $1,325 per ounce in 2019. "(This is) driven by our view that the U.S. Fed will hike rates by more than is reflected in the market," the researcher said in a note, adding that inflation and geopolitical risks in 2018 would keep gold prices supported. Silver climbed 0.4 percent to $16.97 an ounce and platinum was up 0.5 percent at $928.40. Palladium gained 0.3 percent to $992 an ounce. On Monday, silver fell 2.3 percent, its biggest one-day percentage fall since Sept. 26, while platinum lost nearly 3 percent, marking its worst day since early May. The global platinum market deficit will rise sharply next year thanks to resurgent demand from the jewellery and industrial sectors and declining production, an industry report said on Tuesday.

Reuters