Gold edges up on dovish Fed minutes

The Fed also flagged concerns about China’s economic slowdown, and how this may impact U.S. economic activity and put downward pressure on inflation.

The dollar index.DXY, which tracks the USA currency against a basket of six major rivals, was up about 0.1 percent at 95.595, in the middle of the 93.718-96.700 range in which it has traded since late August.

Minutes of the FOMC’s September meeting revealed that more members now believe that risks to the central bank’s inflation forecasts are “tilted to the downside”, in light of a weaker world economy. Investors will be scrutinizing the text for clues on when the Fed will implement the first interest rate increase since 2006 later this year or wait until 2016.

Inflation is an obvious deterrent to a rate liftoff, considering longer-term price stability is a fundamental priority for the Fed as part of its dual mandate.

Among other precious metals, silver was set for a near-4 percent weekly jump, after hitting a 3-1/2-month high on Wednesday on a softer dollar and expectations of a delay in a U.S. rate hike.

Fed officials held off on raising short-term interest rates at their September policy meeting because they weren’t convinced that inflation was robust enough to warrant tighter monetary policy, minutes from the meeting showed.

SINGAPORE – Gold climbed on Friday in a delayed reaction to minutes of the Federal Reserve’s last policy meeting that showed the United States central bank was in no hurry to hike rates.

Treasury yields came off session highs before turning higher, with the 10-year at 2.11 percent and the 2-year lower at 0.63 percent.

Overall, the minutes contain similar mixed messages to the statement and dot plots at the time – most see a move this year but concerns regarding the global environment and US$ strength had increased. After the news settled, however, the dollar pared its losses and began to rebound while gold pared its gains and began to retreat, partly due to the steady gains in stocks. The German DAX and France’s CAC 40 index both rose around 0.2 percent, while the U.K.’s FTSE 100 gained 0.6 percent.