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Gold trims losses after U.S. Fed minutes; firmer dollar weighs

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Gold pared some losses on Wednesday after

minutes from a Federal Reserve meeting showed the pace of future

hikes would depend on incoming economic data, while the dollar

also added pressure on prices.

Spot gold fell 0.5% to $1,766.29 per ounce by 2:36

p.m. ET (1936 GMT). U.S. gold futures settled down 0.7%

to $1,776.7.

Minutes from the July Federal Open Market Committee

(FOMC)meeting stated that it could take longer than anticipated

for inflation to dissipate.

The pace of future hikes would depend, the minutes said, on

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incoming economic data, as well as Fed assessments of how the

economy was adapting to the higher rates already approved.

“The gold market viewed the Fed minutes with a dovish tilt

and prices edged higher,” Standard Chartered analyst Suki Cooper

said.

Gold pared losses after the minutes were in, yet stayed

lower, having been down for most of the day on a firmer dollar.

“We expect the Fed to hike by 50 bps in September and focus

will shift to the August CPI data and September non-farm

payrolls data to determine whether inflation is indeed slowing

and labor markets softening,” Cooper added.

Even though gold is seen as a hedge against inflation, rate

hikes raise the opportunity cost of holding zero-yield bullion.

“We still see a Fed that is committed to fighting the

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inflationary pressures with upcoming rate hikes. However, it is

the pace of those upcoming rate hikes that is potentially in

question,” said David Meger, director of metals trading at High

Ridge Futures.

Recent hawkish remarks from Fed officials have weighed on

non-interest bearing bullion, and Fed funds future traders

priced in a 57.5% chance of a 50-bps hike in September after the

release.

Spot silver fell 1.3% to $19.86 per ounce, platinum

was down nearly 1% to $925.89, while palladium

fell 0.77 % to $2,137.71.

(Reporting by Ashitha Shivaprasad, Seher Dareen and Kavya

Guduru in Bengaluru; Editing by Devika Syamnath and Shailesh

Kuber)

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