Gold holds drop after Fed minutes signal slower rate-hike pace

Gold held a drop as investors weighed minutes from the Federal Reserve’s July meeting, which signaled ongoing interest-rate hikes but at a slower pace down the track.

Bullion is hovering near a two-week low after the US dollar and bond yields rose Wednesday, although some losses were pared in the wake of the release of the minutes. The transcript showed Fed officials saw the need to dial back the pace of rate increases at some point but also wanted to gauge how their monetary tightening was working toward curbing US inflation. They also saw the risks of tightening more than necessary.

Swaps tied to Fed policy meeting dates indicated lower odds of a 75-basis points hike next month as opposed to a half-point move. Higher rates weigh on non-interest bearing bullion.

Investor interest in gold has waned, with holdings in bullion-backed exchange-traded funds contracting for a fourth straight day, according to initial data compiled by Bloomberg.

Meanwhile, some geopolitical risks have reared up again as US and Taiwan started formal negotiations on a bilateral trade initiative. Spot gold rose 0.3 per cent to $1,766.15 an ounce as of 8.41am in Singapore, after dropping as much as 0.9 per cent on Wednesday to $1,759.84, the lowest level since August 3.

The Bloomberg Dollar Spot Index edged lower after climbing 0.3 per cent in the previous session. Silver advanced, while platinum and palladium were little changed.