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PRECIOUS-Gold rises as dollar backs off highs after Fed meeting minutes

Published 24/05/2018, 04:56 am
Updated 24/05/2018, 04:56 am
© Reuters.  PRECIOUS-Gold rises as dollar backs off highs after Fed meeting minutes

© Reuters. PRECIOUS-Gold rises as dollar backs off highs after Fed meeting minutes

* GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl (Updates prices, headline; adds comment after Fed minutes)

By Renita D. Young and Zandi Shabalala

NEW YORK/LONDON, May 23 (Reuters) - Gold prices rose on Wednesday as the U.S. dollar backed off its highs against a basket of currencies while investors interpreted minutes from the U.S. Federal Reserve's latest policy meeting as dovish.

Most Federal Reserve policymakers thought it likely another interest rate increase would be warranted "soon" if the U.S. economic outlook remains intact, minutes of the central bank's last policy meeting showed. interest rates make non interest-bearing assets like gold less attractive.

However sentiment was dovish, said Bob Haberkorn, senior market strategist at RJO Futures. "They're backing off the inflation target at 2 percent. Just them saying that signals that [the Fed is] dovish on rates and it doesn't sound very aggressive. That should be supportive for metals."

Policymakers once again debated the inflation path. Several noted that recent wage data provided "little evidence" of overheating in the labor market, while some others saw a risk that "supply constraints would intensify upward wage and price pressures, or that financial imbalances could emerge."

Spot gold XAU= gained 0.3 percent at $1,294.19 per ounce by 2:35 p.m. EDT (1835 GMT), after touching its highest since May 15 at $1,297.84. U.S. gold futures GCcv1 for June delivery settled down $2.40, or 0.2 percent, at $1,289.60 per ounce.

The dollar, in which gold and other commodities are priced, rose versus a basket of currencies .DXY but came off its highs. USD/

Often used to store wealth in times of political or economic uncertainty, gold was underpinned by safe-haven support after U.S. President Donald Trump said he was not pleased about recent talks with China. also saw some safe-haven support after President Sergio Mattarella gave political novice Giuseppe Conte a mandate to lead the first government in Italy made up of anti-establishment parties that have vowed to shake up the European Union, Haberkorn added. also cited a "substantial chance" his summit with North Korean leader Kim Jong Un will not take place as planned on June 12 amid concerns that Kim is resistant to giving up his nuclear weapons. has shown reduced volatility in the last few trading sessions as it attempted a break above $1,300 and prices are "waiting for a new, clear direction," said ActivTrades chief analyst Carlo Alberto De Casa.

Silver XAG= fell 0.4 percent at $16.45 an ounce and platinum XPT= was 0.2 percent lower at $904.30 an ounce.

Palladium XPD= eased 1.2 percent to $979.10 an ounce.

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