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Gold relatively flat, as investors await release of Fed's Sept. minutes

Published 10/07/2015, 12:37 PM
Updated 10/07/2015, 01:02 PM
Gold fell by less than 0.5% on Wed. but still remained above $1,145 an oz.
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Investing.com -- Gold futures were relatively unchanged on Wednesday amid a flat dollar, ahead of the release of the minutes of the Federal Open Market Committee's September meeting on Thursday afternoon.

On the Comex division of the New York Mercantile Exchange, gold for December delivery traded between a low of $1,141.40 and a high of $1,153.20 before settling at $1,145.10, down 1.30 or 0.11% on the session. After surging by more than 2% last Friday, gold has been relatively stable over the last four sessions. Over the last month of trading, gold has gained approximately 2.5% in value. The precious metal has also risen by more than 4% since slumping to near-decade lows in late-July.

Gold likely gained support at $1,105.80, the low from Oct. 2 and was met with resistance at $1,169.00, the high from Aug. 24.

Investors await the release of the minutes from the Fed's September meeting on Thursday for further hints on whether the U.S. central bank could raise short-term interest rates before the end of the year. Last month, the FOMC voted to leave its benchmark Federal Funds Rate at its current rate between zero and 0.25%, marking the 55th consecutive meeting it decided to keep the rate unchanged at a near-zero level. While one member of the FOMC, Richmond Fed president Jeffrey Lacker voted for an increase of 0.25%, four others felt that the Fed should wait until 2016 before raising short-term rates. By comparison in June, only two FOMC members were in favor of delaying a rate hike until next year.

While the FOMC indicated that it had seen significant improvements in the U.S. economy since it last met in July, it also expressed concern that significant headwinds from weakness in China and the global economy overall could restrain domestic growth. Following the meeting, Fed chair Janet Yellen said it was likely the FOMC could hike rates by the end of the year barring unforeseen events over the next several weeks. Last week, though, a dismal U.S. jobs report for September could have planted seeds of doubt among FOMC members whether a rate hike this year should be appropriate.

On Tuesday, San Francisco Fed president John Williams reiterated that he still believes the FOMC will raise rates in 2015. Even so, Williams expects the pace of rate hikes to be the "most gradual tightening cycle in the history of the Fed."

A rate hike is viewed as bearish for Gold, which struggles to compete with high-yield bearing assets in rising rate environments.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, inched up 0.10% to 95.63 in U.S. afternoon trading. Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for December delivery gained 0.021 or 0.13% to 16.005 an ounce.

Copper for December delivery rose 0.011 or 0.46% to 2.366 a pound.

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