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Gold rises after Trump disbands councils

Key Points
  • Spot gold may test technical resistance at $1,278/oz.
  • Palladium hits over 1-week low.

Gold recovered early losses Wednesday after President Donald Trump disbanded two of his White House initiatives.

In a private phone call Wednesday afternoon, CEOs who were part of a strategic council to Trump agreed to disband the group and condemn Trump's confrontational response to a violent white supremacist rally in Charlottesville, Virginia.

"There really was nothing to debate," said one member of the forum, who described the president's fiery Tuesday news conference as a "tripwire."

Spot gold rose 0.57 percent to $1,278.67 per ounce, below a two-month peak of $1,289.73 touched on Monday.

U.S. gold futures for December delivery settled at $1,282.90 per ounce, up $3.20.

Gold extended gains after the Federal Reserve released the minutes from its July 26 meeting at 2 p.m. in New York. The minutes showed Fed officials were split over the path of future monetary policy. Some officials preached caution while another raised concern over delaying the normalization process.

Investors largely expect the central bank to start unwinding its massive $4.5 trillion bonds portfolio — which it accrued trying to stem the economic downturn from the financial crisis — in September.

But the market is also split as to whether the Fed will raise rates once more this year. Market expectations for a December rate hike were about 45 percent, according to the CME Group's FedWatch tool.

Earlier in the day, gold had traded slightly lower as tensions between the United States and North Korea seemed to dissipate. Gold had rallied after a war of words between U.S. President Donald Trump and North Korea's leader about Pyongyang's development of nuclear missiles. But in an example of how tension has subsided in recent days, Trump praised North Korean leader Kim Jong Un on Wednesday for a "wise" decision not to fire missiles towards the U.S. territory of Guam.

"No matter what you think about Trump, he still wants to avoid a military confrontation with North Korea," said analyst Carsten Menke at Julius Baer in Zurich. "And based on that working assumption, we see gold prices moving lower rather than higher for the next couple of weeks."

Prices are forecast to move back to the lower end of its range at around $1,200 in three months, Menke added.

Also pressuring bullion was a firmer dollar index , which held near a three-week high on Wednesday as strong U.S. retail sales a day earlier boosted risk appetite.

Among other precious metals, silver added 3.03 percent at $17.094 per ounce and platinum rose 2.14 percent to $977.50 per ounce.

Palladium gained 2.99 percent to $912 after touching its lowest in over a week earlier in the session.