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Gold at 1-month high after Fed hints Sept rate hike is less likely

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Gold prices extended gains to a one-month high on Wednesday, after minutes from last month's U.S. Federal Reserve meeting hinted to a decreased likelihood for interest rates to be raised in September, pushing the dollar lower.

Minutes from the July meeting showed policymakers continued to fret that lagging inflation and a weak global economy posed too big a risk to commit to a "liftoff," though an improving job market edged the Fed closer to an interest rate hike.

"Clearly the gold bulls think September is off the table, and growth and currency risks are the next hurdle," said Phillip Streible, senior market strategist for brokerage RJO Futures in Chicago.

Spot gold was up 1.2 percent at $1,131.33 an ounce, having touched a one-month high at $1,131.90. Traders noted strong resistance at $1,135.

U.S. gold futures for December delivery settled up 1 percent at $1,127.90 an ounce.

Expectations that the Fed is on track to increase rates for the first time in nearly a decade helped push gold to 5-1/2-year lows last month. Rising rates lift the opportunity cost of holding non-yielding bullion, while boosting the dollar.

However, mixed U.S. data and worries over global growth and stability after China devalued the yuan last week, dampened that speculation, allowing gold to recover.

"The minutes show the Fed was concerned about disinflationary pressures coming from China before China's move to allow its currency to depreciate," said Axel Merk, president and chief investment officer of Merk Investments in Palo Alto, California.

"As such, the market appears to price in that a September rate hike is now less likely, providing support to the price of gold."

The dollar extended losses after the minutes were released, dropping as much as 0.7 percent.

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Spot platinum was up 1.7 percent at $1,007 an ounce and palladium was up 2.1 percent at $606.72, though neither was far from multi-year lows reached earlier this month.

Miner and commodities trader Glencore posted a 29 percent fall in first-half earnings just a day after saying it was considering closing its Eland platinum mine in South Africa due to falling prices.

"The mine produced about 35,000 ounces of platinum in 2014, but was expected to expand significantly," Macquarie said in a note.

Silver was up 2.5 percent at $15.23 an ounce, recouping some losses after it tumbled nearly 3 percent on Tuesday, its biggest one-day loss since early July.