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Gold rises on Fed caution

August 18, 2017

LONDON: Gold rose for a second day on Thursday after Federal Reserve officials hinted that US interest rates could rise more slowly than expected, while palladium was lifted to a 16-year high by strong industrial metals markets.

Spot gold was up 0.2 per cent at $1,284.68 an ounce at 1345 GMT after rising 0.9pc the previous day. US gold futures for December delivery gained 0.6pc to $1,290.60 an ounce.

The minutes of the Fed’s July 25-26 policy meeting showed some policymakers wished to halt further rate increases until it is clear the trend of soft inflation is transitory.

Commerzbank analyst Carsten Fritsch said US President Donald Trump’s decision to disband two high-profile business advisory councils also helped gold because it shook confidence in Trump’s ability to enact economic stimulus, lowering expectations of rate rises.

Palladium surged 1.5pc to $927.75 an ounce after touching $929.50, the highest since February 2001. The metal, used in the auto industry for emissions-controlling catalytic converters, was being carried higher by a strong rally in industrial metals such as copper and aluminum this week, said Dominic Schnider at UBS Wealth Management in Hong Kong. Silver added 0.1pc to $17.10 an ounce and platinum was down 0.3pc at $974 an ounce.

Demand for gold as a safe haven also resurfaced after South Korea warned North Korea against “crossing a red line” and the United States said it would go ahead with joint military drills despite pressure from China, Fritsch said.

Published in Dawn, August 18th, 2017