Gold futures close higher after dovish Fed Minutes

He added, “My view on this is that, to a few extent, the bubble that was created in housing in the U.S, which culminated ultimately in the crash of 2008, was driven by running ultra-low interest rate policy for, probably, longer than people should have done so”. It was all in stark contrast to the rhetoric of Bank of England Governor Mark Carney, who stressed in Peru on Thursday that the bank is not bound to wait for a move in USA interest rates before it raises its own.

Dudley said “it’s possible” that the Fed could begin hiking later this month, though he questioned whether data between now and then would give it confidence.

The chances of a move were hammered in August when Beijing surprisingly devalued its yuan currency, fuelling worries about the Asian economic giant while last Friday’s below-par jobs data also struck a blow.

Many had expected the first rate hike to occur in September, but minutes of that meeting released Thursday revealed concern among Fed officials about a significant slowdown in China, which roiled markets in August. It is likely far better for markets and for the USA economy if the Fed slowly starts to raise rates this year, instead of being forced to raise rates quickly in the coming year.

Chicago Federal Reserve President Charles Evans said Friday he believes the central bank should hold off on raising interest rates until there is more evidence inflation is rising toward the Fed’s target. US stock prices opened little changed.

Let’s face it, the Fed is in a tough spot – labor market indicators like job growth and the unemployment rate are signaling that the USA economy is ready for higher interest rates.

At midday, the Dow Jones Industrial Average was up 22.22 points, or 0.13 percent, to 17,072.97. The Standard & Poor’s 500 index rose a point to 2,014 and the Nasdaq composite rose 16 points, or 0.3 percent, to 4,827. The odds of a rate increase in 2015 have dropped in the past month and traders and analysts surveyed by Bloomberg are the most bullish on gold in three weeks. He added that inflation could quickly return to the Feds 2% target once the impact from lower energy prices and raw material input prices fade. The companies said they flew almost full flights last month, an important profit driver for the industry. Export prices fell 0.7 percent, more than the 0.2 percent decline forecast by economists. Brent Crude, used to price worldwide oils, gained $1.72, or 3.4 percent, to $53.05 a barrel in London.

Gold is up 0.8 percent for the week, after hitting a near-two-week high earlier in the week.

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