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Gold futures hit 2-day high ahead of Fed FOMC minutes

Published 05/18/2011, 10:08 AM
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Investing.com – Gold futures extended gains on Wednesday, rising to a two-day high as ongoing concerns over Greece’s debt boosted the appeal of the precious metal, while markets awaited the release of the minutes from the Federal Reserve’s policy-setting meeting last month.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,496.45 a troy ounce during U.S. morning trade, climbing 0.84%.     

It earlier rose as much as 1% to USD1,498.45 a troy ounce, the highest price since May 16.

Jean-Claude Juncker, who chairs the group of euro zone finance ministers, said on Tuesday that there was a need to move towards a "soft restructuring" of Greek debt, but other officials were opposed to such move, while Greece's prime minister said restructuring would do more harm than good.

Investors often buy gold as a haven against economic and political uncertainty.

Meanwhile, the Federal Open Market Committee was to release the minutes of its April 26-27 meeting later in the day. Investors will look for hints about the Fed's stimulus program known as QE2, which is widely expected to end in June.

Global financial service provider Lloyd’s Banking Group said in a report earlier in the day that, “any mention of 'exit strategies' in the minutes will be taken with a pinch of salt after the softer data run over the last week or two."

Official data on Tuesday showed that U.S. housing starts and building permits fell in April, while factory output slumped, underlining the view that the Federal Reserve would keep its loose monetary policy.

Elsewhere, silver for July delivery rallied 2.9% to trade at USD34.91 a troy ounce during U.S. morning trade, after earlier rising by as much as 3.1% to USD35.00 an ounce, the highest price since May 16.   

"Given that the key driver of silver prices remains investment demand, they are likely to remain volatile until they find support from physical demand, which we expect to materialize around the low-USD30s," Barclays said in report earlier Wednesday. 

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