Gold lifts on dovish Fed minutes

Frankfurt (Oct 9)  Gold prices in Europe rose on Thursday, with minutes from the US Federal Open Market Committee meeting providing an uplifting breeze.

Spot gold was trading at $US1,228.75 a troy ounce, up 0.6 per cent, in early morning European trade.

Market participants have interpreted the tone of the FOMC minutes as suggesting that US interest rates could remain lower for longer than expected, causing the dollar to weaken.

As gold is priced in dollars, it becomes cheaper to purchase for other currency-holders when the greenback softens. This tends to reduce the price of gold and generate a spike in demand.

"Fed concerns about a stronger US dollar and global slowdown as risks to the US outlook have encouraged gold buyers to emerge. While it's a tentative step back into the buying camp, the move has been enabled by quite decent physical demand from the return of Chinese participants," said Edel Tully at UBS.

The other precious metals also caught the updraft. Silver was up 1.6 per cent at $US17.646 an ounce, platinum was up 0.5 per cent at $US1,283.20 an ounce, and palladium was up 0.4 per cent at $US803.75 an ounce.

Source: BusinessSpectator